Nairobi — Increased expansion of supermarkets is a key driver of the growth of retail outlets and subsequently, the property market in Kenya, Knight Frank report has said highlighting store expansion activity from both domestic and international players witnessed in the past
The 2022/23 edition of Knight Frank’s Africa report termed supermarkets as a ‘darling’ of the retail sector whose growth has been informed by increased demand for retail shops and high mall shops.
According to the H2 market update by the real estate firm, the increase in retailer activity saw an increase in prime rents from USD 4.00 per square foot per month to USD 4.10 per square foot per month.
Naivas Supermarket, the largest local supermarket chain with 78 branches has opened more than five outlets including Juja Mall , Nyayo Estate, Mega Mall Kisumu, Aga Khan Walk CBD, and Oasis Mall.
Chandarana Food Plus, another local supermarket chain, opened more than three additional branches including Golden Life Mall in Nakuru City, Buffalo Mall in Naivasha, and the newly opened Highlands Mall in Eldoret Town thus increasing its number of branches to 23.
“Supermarkets have emerged as star performers. Increased sales and store expansion activity from both domestic and international players means supermarkets will remain a robust asset class over the short to medium term. Local retailers have increased their branches by 30 percent over the past 2 years, equating to an expansion of c. 100,000 sqm,” the report indicated.
Overall, the report noted that Nairobi remains the strategic capital of East Africa and the first place international investors list as a preferred entry point into Africa.
Mark Dunford, CEO of Knight Frank Kenya, says there is increased demand for student accommodation and housing for young professionals with a growing number of undergraduates, a youthful population
“An undersupply of formal student housing have seen developers responding by developing purpose-built student accommodation (PBSA). With the mainstream market still suffering from an undersupply of affordable housing, demand for co-living is likely to continue rising for the foreseeable future. Investors find this sector attractive because of its resilience and strong long-term economic fundamentals,” he remarked.
While there is increased awareness of (Environmental, Social and Governance) ESG concepts among developers, Knight Frank noted that the number of green-certified developments remains low.
“Overall, demand is centered on best-in-class space, with investors and occupiers zeroing in on schemes that satisfy their ESG (Environmental, Social and Governance) criteria; a theme that is likely to intensify, raising questions about the future of older, more secondary, non-ESG compliant stock. Despite this, the number of green-certified developments remains low,”the report indicated.