The rising number of shopping malls in Kenya is likely to spell doom for developers, according to a report by Britam Investments.
Future of Kenyan malls hangs in the balance as tenants gradually diminish
Some retailers, who are the anchor tenants in many malls, are struggling to pay rent
The firm’s latest real estate report capturing trends in the first half of the year, says the glut in malls countrywide is expected to make it harder to get tenants.
“Slower uptake of space is anticipated within the new malls due to demand and supply mismatch, where tenants are fewer than the supply,” says Britam Asset Managers.
This will in turn impact on retail rents that are expected to remain relatively stable as more space is added to the market.
This report points to a telling situation of how the promise of sprouting malls to reap big from a ballooning middle class is leaving a bitter taste in the mouth of businesses, realtors and banks that financed them.
Nakumatt and Uchumi supermarkets are among troubled retailers which have announced plans to close poorly performing branches in Kenya and Uganda as a way of cutting cost.
Even then, the Britam report points out that malls designed to cater for their neighborhoods are expected to achieve better returns as opposed to large mega malls which are mainly designed as destination malls.
Some of the major mall additions to the retail stock this year are the Rosslyn Riviera (GLA) and Two Rivers Mall (GLA, both on Limuru Road, Nairobi.
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