Kenya’s New Shopping Malls Attract Global Supermarket Chains23rd May, 2016
Kenyans are set to experience international shopping going by the interest from global supermarkets setting up in Nairobi’s new Malls.
A research released by Knight and Frank say supermarkets from outside Africa are making an entry to Kenya’s retail market either through partnership with local businesses or direct in a move inspired by high levels of recent mall constructions.
The Kenyan market is currently dominated by Nakumatt, which has more than 20 supermarkets in Nairobi, while other major players include Tuskys, Naivas and Uchumi. “Retailers from outside of Africa are taking a growing interest in Kenya, and the most high profile imminent market entrant is the French supermarket chain Carrefour, which will be an anchor tenant at both Two Rivers and The Hub Malls,” says Knight and Frank.
“The Turkish fashion retailer LC Waikiki will also be entering the Kenyan market by opening a store at Two Rivers Mall,” it says.
To signify the looming competition in Kenya’s retail market, the survey noted that a number of foreign retail chains are also considering setting up branches and are in the process of looking for partners to help them roll out.
However the difficulty of sourcing appropriate local partners is regularly cited as a major obstacle to market entry by the interested chains.
“There are only a small number of local firms with the expertise to partner with international retailers, with the most prominent being Deacons, which operates brands such as Adidas, Mr Price and Bossini in Kenya,” says Knight and Frank.
According to Knight and Frank research Nairobi has some of the finest shopping malls in Sub-Saharan Africa and many are in the pipeline of being developed which is making it more conducive for international retailers seeking to expand their footprint in the region to set up.
Nairobi is ranked as the largest market by existing shopping centre floor space and it has the biggest development pipeline. “Shopping centres have been a feature of Nairobi since the 1980s when the Sarit Centre, regarded as the city’s first formal mall, opened. Over the following decades, Nairobi’s retail landscape has been populated by other successful schemes such as Yaya Centre, Village Market and The Junction. However, the current wave of development is creating modern malls that are setting new standards for size and quality within the market.”
The most prominent shopping centre opening in 2015 was the first phase of Garden City Mall, comprising 33,000 square meters. This is part of a large-scale mixed-use project developed by Actis, which also includes residential, office and hotel elements. It is planned to be fully completed in 2017, when the mall will be expanded to 50,000 square meters.
The development pipeline includes Centum’s keenly awaited Two Rivers project, which is expected to open in 2016. A 62,000 square meters mall will be delivered as part of the first phase of this major mixed-use scheme being built on a 100 acre site.
Another key project set to open in 2016 is The Hub in Karen, one of Nairobi’s wealthiest neighborhoods, which will offer 30,000 square meters of retail space and is being developed by Azalea Holdings, a consortium of local investors.
“Nairobi’s newest malls have leased well and the rents that they have achieved compare favorably with the city’s more established centres. Among the new projects, there is a clear trend towards mixed-use, rather than pure retail, development as office, residential and leisure facilities have been incorporated into schemes,” notes the survey.
Aside from Actis, most of the developers and landlords of Nairobi’s shopping centres are local Kenyan property owners. However, reflecting a trend seen elsewhere in Africa, there is growing interest in the market from South African investors, and Stanlib is understood to be poised to acquire Greenspan Mall in Donholm Estate.
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