Kenya Retail Real Estate Market Evolved From 1983 to 2023

Kenya Retail Market Evolution (1983–2023)

Kenya's formal retail sector has experienced significant growth since 1983, driven by positive demographics, improved infrastructure, and a favorable business environment.

Foreign capital has played a crucial role in attracting international retailers, making the wholesale and retail sector a key contributor to Kenya's GDP, accounting for 15.4% of FDI.

Moreso, The formal retail space has grown at an average annual rate of approximately 28.3% since 1983, with the current total stock reaching 1,232,925 m2, tracked by estate intel.

Notably, 15% of retail malls were developed by foreign investors, while the remaining 85% were constructed by domestic investors.

Compared to other African countries, Kenya has emerged as a leading retail hub, particularly in Nairobi, with a higher density (0.14) than cities like Lagos and Accra (0.018 and 0.06, respectively).

The evolution of Kenya's retail sector can be delineated across significant timelines:

1. Pre-2000 (The Debut) of Kenya retail market

The formal retail market began in 1983 with the opening of Sarit Center, Kenya's first shopping mall in Nairobi's Westlands District. This spurred the development of other malls, contributing a total of 67,895 m2 of retail space.

Pre-2000 (The Debut)

2. 2000 – 2010 (The Expansion)

The retail market expanded between 2000 and 2010, adding 106,069 m2 of stock, driven by the rise of homegrown retail brands like Nakumatt and Uchumi. This period saw the completion of key centers like Westgate Mall, Capital Center, and Junction Mall.

2000 – 2010 (The Expansion)

3. 2010 – 2015 (Foreign Capital Boost) Of Kenya retail market

Foreign investors and developers increased their interest in the retail market during this period. Projects like Junction Mall and Garden City Mall marked significant milestones, with a total completion of 339,123 m2 of stock.

2010 – 2015 (Foreign Capital Boost)

4. 2015 – 2018 (The Boom Era)

The retail sector experienced a boom with the launch and completion of major projects, including Two Rivers Mall, Garden City Mall, Rosslyn Riviera Mall, Village Market expansion, and The Hub Karen. A total of 503,193 m2 of formal retail space was added during this era.

2015 – 2018 (The Boom Era)

5. 2018 – 2023 (The Great Decline)

The market faced a decline with rising vacancies (19.7% in 2017) due to oversupply and the impact of the COVID-19 pandemic. Despite challenges, 2023 witnessed the completion of BBS Mall, the largest shopping center in Kenya.

2018 – 2023 (The Great Decline)

Despite the overall growth, Kenya's formal retail penetration is still less than 50%, primarily due to uneven distribution, inadequate infrastructure, currency depreciation, high-interest rates, and other financial constraints. The closure of key retailers like Shoprite, Nakumatt, Game Stores, Builders, and Tuskys has been attributed to these challenges.

In conclusion, consumer demand in the retail market is driven by convenience, with a preference for both large malls and smaller retail stores. The hybrid shopping strategy is expected to grow at an 11.0% CAGR between 2023-2027. Future developments, such as the Beacon and Cove Malls in Nairobi, are anticipated, but the sector is expected to experience a slowdown.

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Kenya Retail Real Estate Market Evolved From 1983 to 2023

Kenya Retail Market Evolution (1983–2023)