Property: India’s Richest Business Mukesh Ambani Cashes on Kenya Real Estate Boom

Mukesh Ambani cashes in on Kenya’s real estate boom
by Sunainaa Chadha Jun 27, 2013 
Ben Woodhams, Managing Director at KnightFrank
http://rm.co.ke/blog/kenya-property-news/mukesh-ambani-cashes-in-on-kenyas-real-estate-boom/

India’s commercial real estate maybe in doldrums but in Kenya, Nairobi has witnessed the fastest growth rate in rentals for high-end commercial property in 2012. And guess who is cashing in on this real estate boom?
Yup, it is India’s richest business man Mukesh Ambani.
According to a report in the Hindu Business Line, Ambani-owned Reliance Industries has bought 10 prime land plots in  Nairobi, for around Rs 202 crore ($33.9 million) for commercial and residential  development as agricultural land here is cheaper than residential. This deal was jointly inked by RIL and its subsidiary Delta Corp East Africa Limited (DCEAL).

Source:Knight Frank

This is not Ambai’s first tryst with real estate in Kenya. He had previously also acquired and developed prime plots within Nairobi which were either sold or rented to international organisations, private firms and government agencies. RIL Group holds a 60% stake in the joint venture with Delta Corp which had in 2008 more than one million square feet of land at various stages of development.
Ambani has been slowly  upping his interest in East Africa, and with rising demands for both commercial and residential spaces, Ambani is cashing in by building office towers in Nairobi’s Upper Hill and Westlands areas.
In fact, Reliance Industries has sold two properties in Nairobi–Delta Centre (Upper Hill), which was sold to the World Bank, and Delta Towers (Westlands), which was sold to the University of Nairobi and PricewaterhouseCoopers.
According to Mentor Group, a real estate firm, Upper Hill and Westlands will contribute 70 per cent of the 1.7 million square feet of office space that will come into the market annually over the next two years, with Upper Hill expected to record a temporary office space supply glut in 2015.
A survey by Economist Intelligence Unit (EIU), the research arm of the Economist, ranked Nairobi 112 among the 120 most promising global cities of the next decade, based on parameters like the city’s economic strength, financial maturity, physical capital, human capital, global appeal etc.
“In its broadest form, competitiveness is defined as a city’s ability to attract capital, businesses, talent and people. The Index benchmarks the competitiveness of cities at two points in time: today and in 2025,” said the report. According to the report, Nairobi’s profile as a regional business hub has been growing as seen by the number multinationals, from diverse industries, which have chosen to open shop in the Kenyan capital or decided to choose the city as their base for Africa-wide operations.
However, infrastructure is still the biggest laggard for the city. According to a report by global real estate consultancy firm Knight Frank, poor roads, interrupted water and power supplies are hindering the city from achieving a higher rank.
The list of multinationals that have recently set base in Nairobi include General Electric, Google, IBM, Visa International, Pepsi, Nestle, Foton Automobiles, Bank of India and HSBC. According to Knight Frank, companies relocating their regional headquarters to Nairobi are flying in a large number of expatriates, feeding the high-end market for residential property.
“A significant proportion of the recent take-up has been due to large corporates setting up regional headquarters in Nairobi, in preference to the traditional regional hub of Johannesburg,” said Ben Woodhams, Managing Director at KnightFrank in its Africa Report 2013, adding that in 2012, office space rent in Nairobi’s high-end areas rose 17.9 percent against the 5.1 percent global average.
But this real estate boom, is proving to be a bane for the agriculture sector as developers argue that it makes more business sense to build homes on lush farmlands. Agriculturalists, on the other hand, argue that urban expansion is threatening the  sector which is a key source of exports and forex for the  country.

Kenyan Marketer: Business Culture Color Emotion Guide. Confidence!!

Kenyan Marketer: Color Emotion Guide: An infographic by the team at The Logo Company

GARDEN CITY: Largest Mall in East and Central Africa by ACTIS

IFC to inject Sh4bn in Thika Road Shopping Mall, Garden City comprise retail, leisure and residential segments

Posted in Business Daily Africa  |Thursday 9th May, 2013

howwemadeitinafrica.com by Dinfin Mulupi | Business Focus,, Kenya, Property, Retail | July 10, 2012

London-based private equity firm Actis is planning to invest in a 130,000 m² mixed use development in Kenya, which will host the largest retail mall in east Africa. The Garden City development will be located along the Nairobi-Thika road, a KSh. 27 billion (US$322 million) new highway.
This is the latest major commercial project to be announced ahead of the completion of the Thika highway in September. Thika is an industrial town about 40 km north-east of Nairobi. Actis is developing Garden City Mall on a 32-acre site that previously belonged to East African Breweries Limited.

Garden City is on Thika super highway. The upgraded road is expected to boost the demand for space at the mall. World Bank unit starts talks for loan and stake in Garden City on superhighway.

Actis has said Garden City will cost $150 million (Sh12.6 billion) over five years. The International Finance Corporation (IFC) is negotiating to inject Sh4.1 billion ($49.8 million) in Garden City Mall, a shopping complex conceptualised by private equity firm Actis.

The investment will be in form of a loan and equity stake in Actis, according to an IFC disclosure note seen by the Business Daily. Actis says that Garden City Mall, a development along the Thika Super Highway, will be the region’s biggest shopping complex.

Other firms that have eyed investments along the highway include supermarket chains Uchumi and Nakumatt, PepsiCo which is establishing KSh. 2.4 billion ($29 million) bottling plant, and European furniture chain IKEA. Several residential projects like Tatu City, Migaa, and Thika Green have also been inspired by the eight lane highway, which will ease traffic along the busy Nairobi-Thika road.
According to a press release from Actis, the retail mall will include a flagship store for Game, their first in Kenya. Detailed discussions are progressing with other foreign retailers looking to enter the rapidly-expanding Kenyan market, such as South African fashion group Foschini.
Other than the 50,000 m² retail mall, Garden City will also accommodate state-of-the-art commercial premises, 500 new homes and a central park, offering family friendly leisure space for Kenyans and visitors to the city. The park will also house an outdoor events arena for the staging of concerts and shows.

“Garden City offers a rare opportunity to create a large scale, world-class development directly serving the needs of Kenyan businesses, homeowners and shoppers. We have been encouraged by the strong demand shown by both local and international retailers, who like us, see Garden City as a landmark destination in Nairobi and the east African region. The inclusion of the central park and our commitment to green building measures will burnish Actis’s reputation as sub-Saharan Africa’s most experienced private equity real estate investor,” said Michael Turner, Actis head for east Africa.
The project is expected to attract more foreign retailers into the Kenyan market. Garden City is likely to send prices skyrocketing in neighbouring areas along the Thika highway.
Charles Kibiru, the managing director of Thika Greens, a golf estate located in Thika, reckons that Kenya should expect similar investments along the highway.
“Thika highway is the place to go. It is a hinterland and foreign investors should put their money here. We welcome the Actis investment because it will bring services closer to the people and help decongest the Nairobi central business district,” said Kibiru.
The project, he added, will also lead to job creation and economic development by attracting foreign brands to Kenya.

“Construction is expected to commence in June 2013 and IFC is considering a loan of up to $40 million and providing up to $9.8 million in equity to the project,” says the IFC note. Ground breaking for the multi-billion shilling project was planned for December 2012, and completion projected for May 2014.

 Garden City is using a ‘green-by-design’ approach incorporating sustainability measures from the very beginning of the design process: current features under discussion include water recycling and rainwater harvesting, the installation of solar collectors and the extensive planting of indigenous trees and landscaping forming a central park. Actis has a track record of successful real estate projects in Kenya, including its office complex Nairobi Business Park.