Why You Need to Tap on Emerging Retail Space

By Moses Adongo

Retail space investors intending to put their money in the market have been urged to shift their focus away from Nairobi to other markets such as Mombasa and Mt Kenya that have low retail space supply but offer attractive yields and high occupancy rates.

According to a report released early last month by Cytonn Investment, Mombasa and Mt Kenya ranked among the best regions for real estate development because of the high demand. The report showed Mombasa having high retail space demand of 0.3 million per square feet while Mt Kenya’s demand stood at 0.2 million. The two towns had attractive yields of 8.3% and 9.9%, occupancy rates of 96% and 84.5% respectively.

It also revealed a mushrooming supply of retail space in Nairobi with statistics putting the supply increase at 4.8% from 6.2 million square feet in 2017 up to 6.5 million square feet in 2018. This has technically crowded retail investment in the capital city.

To the contrary, the report highlighted poorly performing Satellite Towns with average yields of 6.6% occasioned by low rents of Ksh124.50 per square feet. This exposed a lack of enough supply for retail services opening the market for willing investors.

Real estate performance in Kenya has shown positivity owing to increased growth in population and urbanization which, according to the report, stood at 2.6% and 4.3% per year respectively. Other factors making the sector attractive for investment include increased foreign investment in the country, e-commerce evolution and increased infrastructural development that has opened up new areas for investment. Investors, however, are advised to keenly asses the markets before putting up investment in retail space.

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