A congested shopping mall project pipeline – concentrated largely in Nairobi – could result in a slowdown in retail rentals in the medium term, Oxford Business Group has warned.
The global publishing and research firm said an influx in international brands of retail supermarket chains is likely to chock up ‘less lucrative rental space’ offered by established malls.
The firm says foreign brands have developed a huge appetite for new and upcoming malls piling pressure for upgrades to those already established.
“While Nairobi does have several new mall projects in the pipeline, which should help attract new retailers, there are some concerns that the market may struggle to accommodate the coming floor space,” said the report released on Friday.
Additional formal retail space may lead to a risk of oversupply, according to some analysts, as leasing activity declined in some established malls.
Major retailers are reported to be moving to newer malls or secure space in upcoming developments.
Nairobi has seen a number of dedicated retail properties open up in the past decade, with more than 390,000 sq metres of gross leasable area (GLA) already available.
A further 470,000 sq metres is in the development pipeline, according to real estate development reports.
In mid-May Carrefour, the world’s second-largest retailer, opened its first outlet in Kenya, highlighting rise in competition in the retail segment.
The French chain – through its franchise-holder, Dubai-based Majid Al Futtaim Retail – occupies 5000 sq metres as the anchor tenant in the new Hub Karen in Nairobi.
Carrefour has plans to open a second outlet at the Two Rivers Mall, also in the capital, set to launch by the last quarter of this year.
Botswana-based supermarket chain Choppies over the same month announced it had taken over eight Ukwala Supermarket outlets in Nairobi, Kisumu and Bungoma
