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.