I joined JLL at the beginning of this year and my first trip in 2016 was with somewhat of a delegation to Nairobi the Kenyan Capital. It was a terrific opportunity to get to know the Sub Saharan Africa senior management team, meet the JLL Kenyan office members and engage with a widespread of private and institutional investors; and of course my favourite part which includes visits to as many shopping centres as possible!
Kenya achieved one of the highest year on year GDP growth numbers on the African continent at just under 6% for 2015. Kenya, and in particular Nairobi has headlined the East African region as its gateway and preferred destination for the regional headquarters of at least 100 multinationals and corporations.
From sky scraper views, walks and drives around the bustling city the growth numbers surely do come to life. Pedestrian and vehicular traffic alike, everybody is heading somewhere and with particular purpose.
On the development front, the burgeoning commercial development endures. Every corner is under construction, gravel pathways are being replaced by tarred roads and sky scrapers are competing to achieve highest peak status.
I can hardly fault the new 60 000+ square metres of retail space that has recently come on board, namely Garden City and The Hub. These malls are built according to international standards and have attracted a decent proportion of international retailers. My concern for these malls is that a large disconnect may exist between the price points of goods and the levels of disposable income of the local consumer market. I suspect that tenants may take strain in the short term before the market matures.
Interestingly in Nairobi, pre lets on office developments are non-existent. Tenants only occupy a space once a development is complete. With the rapid rate of office development, Nairobi may be over supplied and it is unclear as to where the demand for this space will come from. Nonetheless, investor sentiment seems positive, to quote one wealthy Kenyan developer who is building premier office space, “We will build and they (the tenants) will come.”- And we will certainly be watching that space!