The ongoing infrastructure development and political stability has made Nairobi attractive to new real estate development, largely in industrial space, a forum heard yesterday.
The Knight Frank Africa report 2017, released at the ongoing East Africa Investment Summit , showed that rents for prime industrial space has risen by 11.9 per cent in two years to $4.7 (about Sh485.5 ) per square metre per month, from $4.2 (about Sh433.8 ).
This has been attributed to demand by firms seeking to set up new industries.
Retail rents remained unchanged over the period, stabilised by the increasing retail space on malls whose number has continued to grow in the city.
“Industrial rents have risen as a result of a move by developers into the high-end logistics market,” Knight Frank managing director Ben Woodhams said.
Prime office rents in the city however fell by a fifth since 2015 to $16 (Sh1,652) per square metres per month from $21(Sh 2,170) per square metres per month in 2014/15. Rent for a 4-bedroom executive house was $4,720 (about Sh487,812) per month in 2014/15 and has moved to $4,100(Sh423,735) per month.
“A lot of grade A office space has come into the market over the last two years and we have seen a significant number of established companies taking advantage of this to trade up space,” Woodhams said.
Industry players have however dispelled fears that the city is headed for a property bubble with the oversupply of office space and hotel rooms, noting that more multinationals are eying Nairobi as their entry point into the region.
“This is a short-term over supply but Nairobi has a huge potential. In the next three years all these space will be taken,” Knight Frank chairman Peter Welborn said, “There will be no vacancy.”
He said the market should anticipate for more malls which are phasing out the traditional stand alone retail shops, as shoppers prefer one-stop-shops provided by malls.
Meanwhile, under supply of A-grade quality warehouses, and high demand tenants for quality space has presented a new opportunities for development in Kenya and the East Africa region, Commercial property services company Broll Property Group said yesterday.
Africa Logistics Properties Kenya CEO Toby Selman said Nairobi’s warehousing development should be expanded to the city outskirts, while incorporating modern technology.
The two days forum saw Nairobi tipped to become the future hub for East,Central and South Africa as “infrastructure development and room for expansion” attracts investors.
