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Kenya: Mall mania unfazed by terror strike

Kenya: Mall mania unfazed by terror strike

When terrorists hit Kenya’s trendy Westgate Shopping Mall in the upmarket suburb of Nairobi’s Westlands area in September, it was widely expected that investors would lose their appetite for building suburban malls. Instead, reports Wanjohi Kabukuru, the opposite has happened.

Last year’s brutal terror attack has not dampened the investors enthusiasm for putting their money in retailing. On the contrary, it has inspired more investment in security, emergency medical services and other safety concerns. The heavy construction works on new malls are on schedule.

The Garden City Mall, which is expected to be East Africa’s largest shopping mall covering 50,000 square feet, is under construction on the Thika Superhighway, some 10-minutes drive from Nairobi’s CBD. Financed by the UK private equity firm Actis Capital, the $150m Garden City Mall is a reflection of the fast-changing tastes of Kenyan shoppers.

Shopping malls have become popular social sites and most families see a visit to a shopping mall as an outing of interest. Within sub-Saharan Africa, Kenya comes second to South Africa in terms of retail outlets.

The all-encompassing shopping mall bringing together restaurants, banks, supermarkets, bookstores, cinema theatres, entertainment spots, beauty spas and travel agents among others under one roof first made its appearance in Kenya 20 years ago. Former supermarkets began to be transformed to accommodate other shoppers’ needs, turning them into a one-stop-shop experience.

Shopping malls like Sarit Centre, Village Market, The Mall, Westgate, The Junction Mall, Greenspan Mall, Thika Road Mall, The Taj Mall and Galleria sprang up and redefined shoping. The coastal city of Mombasa boasts City Mall and Diani Beach Shopping Centre, while Kisumu has United Mall and three other similar ventures in the pipeline.

Demand for fancy shopping malls has increased in the last decade and there is no sign of a decrease any time soon, given the number of new malls set to be opened within the next three years. Another significant pointer to the Kenyan retail sector is the interest it has drawn from international investors. Massmart, the South African retail chain, has already shown interest in entering the Kenyan market, with possibilities of buying out an existing chain or setting up independently being discussed.

Similarly, retailing brands such as Uchumi, Nakumatt, Tuskys, Naivas and EastMatt have indicated a keenness in changing their approaches to meet customers’ needs and keep up with the fast-changing pace of competition. The three most successful retail chains, Naivas, Tuskys and Nakumatt, are family-owned enterprises. These supermarket chains started by selling groceries and household goods but now stock furniture, travel accessories, electronics and ready meals. Nakumatt and Uchumi have expanded beyond Kenya’s borders.

Garden City Mall, which will have Kenya’s leading supermarket chain Nakumatt as its premier tenant, is seeking to add a new twist to the swift-changing shopping mall practice. It will also have 420 four-bedroom apartments and town houses currently priced at $250,000 each. It will also include an exhibition area, cinema, children’s play zone, 15 catering units and events arena. Phase one of the Garden City Mall is expected to be complete by the end of this year. The entire complex will be completed in 2017. But Garden City is not the only new mall coming up in town.

The Buffalo Mall, a joint venture between UK investment group Lloyd Capital Partners and a company owned by the family of Lord Delamere, is under construction deep in the Rift Valley town of Naivasha adjacent to the Nairobi-Nakuru highway. The first phase of Buffalo Mall, expected to cost $8.2m, will cover some 22,000 square metres and will involve the construction of restaurants, leisure spots, apartments, hotel complex, offices, warehouses and fuel stations.

This mall is specifically targeting travellers to Western Kenya, tourists and weekending city dwellers who mostly travel to the scenic Lake Naivasha for camping excursions. Buffalo Mall is likely to become bigger than currently planned, depending on the volume of business it attracts. The Delamere family has been involved in the Kenya’s agri-business sector for over a century now. Both Garden City and Buffalo malls are set to complete their first phases and open their doors on Christmas Day 2014.

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Written by African Business Magazine

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