Nairobi malls feel the squeeze

There are growing signs of downward pressure on mall rents in the Kenyan capital, with a number of sitting tenants securing rent reductions and prospective tenants being offered rent holidays by landlords

“Rental income has come slightly under pressure due to a temporary increase in vacancies, coupled with some tenants bargaining for reduced rentals upon renewal of leases,” according to a statement issued by Stanlib Income-Real Estate Investments Trust, which has invested in three Kenyan malls. Meanwhile, new tenants at Rosslyn Riviera Shopping Mall in Nairobi will not have to pay rent for the first six months of their leases and only 50% for the following six. The Kenyan government’s recent decision to impose VAT at a rate of 16% on fuel may have a further negative impact on mall footfall, putting renewed pressure on rents.

According to Sagaci Research’s Shopping Malls Report 2018, Kenya has the second-largest supply of mall space in sub-Saharan Africa (excluding South Africa), behind Egypt, with a GLA (gross leasable area) almost 880,000m².

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