Nairobi leads the way for shopping malls

Nairobi has been named as one of the top five cities in Sub-Saharan Africa, having the largest shopping centre development outside of South Africa, according to a new report.

Tuesday February 9 2016

An artist impression of Two Rivers mall at Gigiri, Limuru Road, Nairobi. Across Nairobi and in other major towns in Kenya several malls both small and large have come up in the last decade and many others are under construction. PHOTO | COURTESY

An artist impression of Two Rivers mall at Gigiri, Limuru Road, Nairobi. PHOTO | COURTESY 

ByBRIAN NGUGI
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Nairobi has been named as one of the top five cities in Sub-Saharan Africa, having the largest shopping centre development outside of South Africa, according to a new report.

A report by Knight Frank titled The Shop Africa 2016 report, assessing Sub-Saharan Africa’s retail markets, shows Nairobi has the largest mall development hotspot with around 470,000 square metres of shopping centre space in the pipeline.

“The developers of Nairobi’s modern malls are building new city hubs, where people can live, work, shop and play, all on the same site, in locations near key transport links,” said Knight Frank Kenya Retail Portfolio Manager Ashmi Shah.

The report names the other top five cities as Luanda, Lagos, Dar es Salaam and Maputo.

These cities fit the profile currently targeted by investors in Africa; that is, “large, fast-growing cities in economies that have seen rapid expansion.”

READ: Nairobi grabs top FDI destinations slot

Nairobi the report says has an existing mall space of 391,000 sqm which is denoted by malls such as The Junction, Sarit Centre and Garden City, Westgate, Galleria and several others.

“While Nairobi has had shopping centres since the 1980s, the current wave of development is creating modern malls that are setting new standards for the market in terms of size and quality. Also, among the new projects, there is a clear trend towards mixed-use development – as opposed to pure retail – as office, residential and leisure facilities converge,” says the study.

LARGEST RETAIL MARKET

It ranks Nairobi city as the largest retail market in the region by existing shopping centre floor space. Key mall space in the pipeline includes the iconic Two Rivers Mall in Runda and The Hub in Karen, which opened on February 4.

The report significantly notes that most of the developers and landlords of shopping malls in Nairobi are Kenyan.

The report also notes that the Kenyan retail market remains dominated by local operators, the Shop Africa 2016, but international chains have assumed a growing interest.

It cites the expected entry of French retailer Carrefour set to be an anchor tenant at both Two Rivers and The Hub. Turkish fashion brand LC Waikiki will also enter the Kenyan market with a store at Two Rivers.

Major international retail groups have developed an interest in the wider Sub-Saharan region, the Shop Africa report states, adding that most international brands enter the region either through partnerships with local operators or franchise agreements.

The variety of retailers seeking to expand their footprint in the region says the report has helped the newly developed malls to absorb demand. Such include regional chains like South Africa’s Shoprite, Pick n Pay, Game and Woolworths, which are venturing into other markets, and home-grown retailers such as Nakumatt, Tuskys and Uchumi in Kenya.

Peter Welborn, Head of Africa at Knight Frank, said: “The shopping centre sector currently provides many of the most eye-catching examples of commercial property development in Sub-Saharan Africa.

However, as the retail sector grows and competition intensifies between retail schemes, developers and investors in the region are also expected to increasingly look for opportunities outside the current hotspots in major cities and turn attention to second- and third-tier cities – such as Naivasha, Nakuru, Nanyuki, Eldoret and Kisumu in the case for Kenya.

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