Kenya has seen increased interest from international retailers seeking to enter the market, either as sole ventures or through partnerships with local investors. Brands such as Carrefour, Game and Debenhams are all set to make their debuts in the Kenyan market during 2015. Demand for retail space has been driven by the increasing spending power of Kenyan consumers and rising demand for overseas brands. This has encouraged a strong level of retail construction, with over 220,000 sq m of retail space currently under development and due for delivery in the near future. Pre-leasing levels in the new schemes have been strong; the forthcoming Garden City Mall, for example, was 96% pre-let as at December 2014.
The Kenyan industrial market remained subdued during 2014, with few leasing transactions and static rents. Activity has been restricted by the outdated nature of Kenya’s industrial stock, which does not meet the needs of major manufacturing companies. The market currently has large industrial requirements and demand for high quality warehouses. Going forward, such demand may be satisfied by large-scale developments in the pipeline such as Konza City, Tatu City and KenGen’s Industrial Park. Average quoted warehouse rents are in the range of US$3.00-3.60 per sq m per month.
The residential market witnessed marginal increases in capital and rental values during 2014. However, there were signs of a slowdown in transactions in the prime residential market towards the end of 2014. Activity has been affected an oversupply of prime property and security concerns, which have been most evident in Nairobi and Mombasa. However, the low to middle-income residential market remained resilient, with demand for such housing still outstripping supply. The uptake of residential mortgages remained low during 2014, as although interest rates have remained stable at 8.5%, rates are still significantly higher than rental yields.