Developers devolve malls to tap county cash

Developers are now setting their sights on county economies, banking on the rising disposable incomes to attract shoppers into malls.

Analysts say while developers build more malls in urban suburbs to tap the growing middle class market, the future profitability of such mega projects lie in overlooked areas where middle-income earners are settling away from the cities.

During this year’s East Africa Property Investment Summit (EAPIS) Britam Asset Manager chief economist Kenneth Kaniu said beyond the Two Rivers Mall expected to open by the end of this year, no further retail space will be required in Nairobi. He said places such as Naivasha, Kisumu, Nakuru, Nanyuki and Mombasa present bright prospects for malls that range from 1,000 to 10,000 square feet.

Realtors note that new shopping malls should now move to counties to follow devolved funds that are transforming lives in various corners of the country. Satellite towns in counties are now attracting the middle class as devolution takes root.

Keen developers have been fast in grabbing the opportunity and Kenya is already seeing an explosion in the construction of shopping facilities away from the capital city.

Kisumu has three malls already — Nakumatt City, United and West End. Meru has two while Nakuru has an equal number coming up. Meru has two,
Naivasha has got its first project, the Buffalo Mall and the second, One Mall, is coming up.

Nyeri county is set to get two malls. Mr Githinji Kinyanjui of Cocorico Investment, the developer of Madiba Shopping Mall whose construction is expected to start in two months, said with devolution money has gone to counties especially through state officers and contractors.

“People in Nyeri would want a place to shop for lifestyle goods and go to a coffee shop. Some even have to go all the way to Nairobi to get these good and services,” Mr Kinyanjui said.

The Sh1 billion Madiba Mall, which was supposed to kick off last year, was partly delayed by wrangles between the Lands ministry and the National Land Commission, but the developer said he has now received clearance to proceed.

The development, with Nakumatt as its anchor tenant, will have a three-star hotel, basement floors, five upper floors and a rooftop with a swimming pool.

Gated community
Mr Kinyanjui is also building 500 units of real estate housing in a gated community named Madiba Gardens next to Mount Kenya University, to feed into what he hopes will be a breakthrough in rousing the sleepy town.

“Nyeri literally goes quiet by 8pm. Having this mall and a gated community is the only way to give it a night life. The investments will also offer direct employment to more than 1,000 residents of Nyeri. This will reduce insecurity,” Mr Kinyanjui said.

Malls are not new to Kisumu with United mall on the Kisumu-Kakamega highway and Swan Centre on Oginga Odinga Street, Mega City and Mega Plaza, the new developments designed to suit the growing middle class, are reshaping the face of the county.

In just 12 months, three new malls — Tuff Foam, West End and Lake Basin — are up and running forcing. This has compelled Mega Properties, which has been in existence, to expand and upgrade its two malls to avoid being rendered outdated.

Mega City in the outskirts of the town and Mega Plaza on Oginga Odinga Street are also undergoing renovations in a bid to stave off competition.
Unlike the older designs, which had mostly standalone shops working exclusively as supermarkets, the new face of malls is expansive mixed-use convenient for people with families with some boasting of whole playgrounds for children.

“During the weekend, I can easily take my family to town and while I visit a barber, my wife would also be at the salon while the children have fun on the jumping castles or just playing around. You also find it convenient to shop before heading home,” Mr Peter Ayueyo, an accountant said.

Top brands are chasing middle income earners eager for flashy lifestyles at the lakeside city. The top brands include Java house, Woolworth stores, City Walk, Tac store, Tile Centre, Samsung Shop, DHL Express and Acacia Hotel, the first four-star facility in the region. This has in turn driven demand for more development to house them.

“We are living in an era where people prefer places where they can work, shop and relax at the same time. The shopping malls offer that. Most host offices, food courts and supermarkets which are at convenient and same places,” said Mr Israel Agina, the chairman of the Kisumu business coalition.

Nakuru is a classic case of where the malls are killing the traditional retail outlets. Tuskys, Nakumat and Woolmart are scrambling for strategic positions in the upcoming malls to open new branches as they intensify their campaign to net more clients in the increasingly competitive business.

The latest entrants in Nakuru are Rehab Mart on the busy Oginga Odinga Road, West Side Mall on Kenyatta Avenue and ACK Mall on Nakuru–Eldoret highway where Tuskys is planning to open its fourth outlet.

Developers like most other businesses are however uneasy about county governments who they accuse of impose overlapping taxes with the national government. Land leases have also been a problem and they want the Lands Ministry, the National Lands Commission and the county governments to address the issue to make it easier to do business in counties.

“Yes indeed malls have created new revenue streams for the county government but this has also put the devolved unit on its feet to continue improving its service delivery. Apart from getting revenue, the county government is using the increasing number of malls to plan ahead in terms of infrastructure development and other amenities,” said Ms Edith Wanjiku Kimani, Nakuru County Government Chief Officer in charge of Trade, Industrialisation and Cooperatives Development.

Ms Kimani assured investors that the county government will support their expansion plans by making sure they operate in business-friendly environment.

She said the county is keen to attract more investors and “as a county government we shall make sure we play our role by making sure the trading licences to the investors are not punitive”.

BY OTIATO GUGUYU; [email protected] , FRANCIS MUREITHI; [email protected], ANITA CHEPKOECH; [email protected] AND SILAS APOLLO [email protected]