Kilimani Ranks Top In Mixed-Use Developments Returns Within The Nairobi Metropolitan Area

By Cytonn Investments / November 12, 2019 | 6:57 am



Mixed-Use Developments

Cytonn Real Estate, the development affiliate of Cytonn Investments, released the Nairobi Metropolitan Area (NMA) Mixed-Use Developments (MUDs) Report 2019 highlighting the performance of mixed-use developments within the Nairobi Metropolitan Area in 2019.

The report focused on the performance of mixed-use developments based on rental yields, occupancy rates, as well as annual uptake, with the research conducted on eight nodes within the Nairobi Metropolitan Area (Westlands, Kilimani, Karen, Ngong Road, Thika Road, Kiambu & Limuru Road, Mombasa Road, and Eastlands).

According to the report, Mixed-Use Developments (MUDs) recorded a decline in performance, with a 0.1 percent point y/y drop in average yields to 7.3 percent in 2019 from 7.4 percent in 2018, attributed to a decline in effective demand and constrained consumer spending due to a tough financial environment.

Kilimani was the best performing node recording average rental yields of 9.1 percent with the retail and office spaces recording rental yields of 9.6 percent and 8.4 percent, respectively, 1.2 percent points and 0.5 percent points higher than the overall MUDs average of 8.4 percent and 7.9 percent, respectively.

The performance was attributed to premium rental rates charged as the area serves a prime commercial and affluent neighbourhood hosting a large portion of Nairobi’s high-end and upper-middle-class population. Mombasa Road and Eastlands were the worst performing areas recording rental yields of 5.7 percent and 5.5 percent, respectively attributed to the low rental charges as a result of competition from informal Mixed-Use Developments.

The table below shows the summary of performance:

The main drivers of mixed-use developments concept include;

  1. Positive demographics as Kenya’s urban population continues to expand at an annual rate of 4.3 percent, compared to the 2.0 percent global average,
  2. Relatively higher developer returns compared to single-use office and retail spaces in the wake of an oversupply in the majority of the commercial nodes within Nairobi,
  3. Continued foreign investments into Mixed-Use Developments, and,
  4. The continued growth of the middle-class population leading to increased demand for convenient spaces that incorporate residential, office and social themes.

The investment opportunity within the Nairobi Metropolitan Area is in areas with high returns such as Kilimani and Limuru Road, which recorded rental yields of 9.1 percent and 8.5 percent, respectively, in comparison to the MUDs market average of 7.3 percent.

The outlook for Mixed-Use Developments (MUDs) is neutral with a bias to positive mainly due to attractive returns compared to single-use themes despite oversupply in the retail and office sectors. The investment opportunity for the concept lies in incorporating differentiated concepts such as serviced apartments and shared offices which provide attractive returns of 6.4 percent and 13.5 percent, respectively, compared to the unserviced apartments and office performance of 5.1 percent and 7.9 percent, respectively, as at Q3’2019.

Appendix

The Summary of performance was as shown below:

Compared to the respective single-use retail, commercial office and residential themes, the Mixed-Use Developments (MUDs) recorded higher returns as follows:

  1. Retail – Retail spaces within Mixed-Use Developments (MUDs) recorded rental yields of 8.4 percent, 0.4 percent points higher than the single-use retail market average of 8.0 percent as at Q3’2019,
  2. Office – Office spaces within Mixed-Use Developments recorded rental yields of 7.9 percent, 0.2 percent points higher than the single-use office market average of 7.7 percent as at Q3’2019, and
  3. Residential – Residential spaces within Mixed-Use Developments recorded average rental yields of 5.4 percent in 2019, 0.4 percent points more than the residential market rental yields of 5.0 percent as at Q3’2019.

The report is available online: (Link here)

 







More Articles From This Author







Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (321)
  • May 2020 (336)
  • June 2020 (329)
  • July 2020 (335)
  • August 2020 (70)
  • 2019
  • January 2019 (253)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (251)
  • July 2019 (338)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (320)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (256)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (185)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (248)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (108)
  • May 2015 (116)
  • June 2015 (120)
  • July 2015 (148)
  • August 2015 (157)
  • September 2015 (188)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950