Opinion: Nairobi promises an exciting year ahead but there’s no resting on laurels

February 11, 2019 By Chris Coulson


Amidst a somewhat gloomy global landscape of US insularity, Brexit in Europe and Chinese dominance, the outlook for Kenya’s economy in 2019 is one bright spark on the horizon.

Analysts at Focus Economics forecast the country’s GDP will grow by an impressive 5.8% in 2019, which is far stronger than this year’s predicted economic growth for the US (2.7 %) and the leading economies in Europe – Germany (2.1%), UK (1.2%), France (1.8%), Italy (1,2%), and Spain (2.4%).

But perhaps what’s been more impressive is the consistency of Kenya’s economic performance. For the past 14 years, the country has averaged annual GDP growth of 5.4%. Growth at this level – sustained continuously over so many years – has helped turn Kenya and other countries in East Africa into highly attractive destinations for overseas investors and as operational bases for high growth international companies.

Kenya’s success has been in part due to its membership of the East Africa Community (EAC). This has produced sustained public and private investment. And looking further ahead, the country’s future could be even brighter as a signatory to the African Continental Free Trade Area (AfCFTA). As President Uhuru Kenyatta recently pointed out, AfCFTA enables African states to trade goods and services in a more orderly and predictable fashion.

In many ways, Nairobi typifies the story across many parts of the African continent. With bustling energy and a young, increasingly well-educated population, the city has been successful in welcoming many modern international businesses, including global digital services companies and business process outsourcers. Indeed, the city’s role in the vanguard of the new economy has already led it to being dubbed East Africa’s ‘Silicon Savannah’.

There is no room for complacency however. There are some major obstacles that need to be overcome and quite quickly. One of the most pressing is the health of Nairobi’s commercial real estate, which is in danger of becoming a drag on growth unless more, better quality, office and executive living accommodation is developed and brought on stream.

We also need to mention the current state of the local debt market as a related factor – non-performing loans in the sector rose by 15.8 per cent between April and June last year to KES44.4 billion (USD444M) compared to the previous quarter. Property developers recorded the highest growth in loan defaults compared to other sectors and this will further restrict evolution of the development market.

The fact of the matter is that far too much of Nairobi’s office stock was developed before 2010 and therefore conforms to older, less demanding, industry standards. We estimate that as much as 40% of the city’s office accommodation comes with inefficient floor plate designs (less than 80% gross to net efficiencies). What this means in practice is that people are condemned to working in offices that are inefficient, unattractive and often poorly maintained. To make matters worse, far too few of these below-par office developments have sufficient parking spaces that meet the needs of their increasingly affluent and aspirational workforces.

Around the world progressive city planners have realised that modern real estate not only accommodates innovation it actively fosters and encourages it. Nairobi’s solution is therefore to develop more Grade A office space, which currently accounts for around only 15% (400,000 m²) of the total available office market. Equally importantly, Grade A developments need to be developed in new locations throughout the City and not focused on the already congested districts. This is why we have been developing the Garden City Business Park where we are constructing the first of four Grade A office building, with the first building being delivered this year.

Located on Exit 7 of the Thika Super Highway, the first of our Grade A offices will be ready for occupation in May with rents from $1.1 per square foot per month for office space. Offices at the Business Park will also have a good supply of car parking, with circa 4 parking bays per 1,000 square feet, which is among the highest in the city.

Giving businesses (both local and international) what they need to thrive, which is flexible modern space capable of attracting and retaining the best talent, and available at highly competitive rates, will contribute to Kenya’s growth prospects.

And as befits a modern mixed-use development, there will be a broad choice of other amenities in Garden City including shops at Garden City Mall, restaurants, cafes, leisure and hospitality facilities and there’s convenient access to exceptional residential apartments and townhouses built to luxurious standards for either ownership or rental.

We are delighted to be contributing to Nairobi’s continued development and growth and, as part of the bigger picture, to seeing East Africa begin to make the kind of impact on the global stage we have seen from India and China over the past decade.


For more information visit actis.com


Garden City is Kenya's first integrated residential, retail and office (mixed-use) development, offering over 400 apartments, duplexes & family villas, an international shopping mall, 60,000 square metres of office space, a modern business hotel and state-of-the-art medical centre. And at its heart, a three acre central park, with a children's play area and generous lawns and gardens.

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  A significant amount of the office stock in Nairobi,…