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East Africa’s largest shopping mall to have strong international flavour

In October, Kenya-based investment company Centum will open the largest shopping mall in East Africa. Located in the capital Nairobi’s diplomatic zone and near four affluent neighbourhoods, the Two Rivers development will feature retail, residential, office, leisure and hospitality components. The shopping centre will have 62,000m2 of lettable space.

An artist's impression of the Two Rivers development

An artist’s impression of the Two Rivers development

James Mworia, CEO of the Nairobi Securities Exchange-listed investment firm, says the development was inspired by an opportunity around “the development of new cities”. Centum is also setting up the Pearl Marina estate in Uganda which comprises apartments, marinas, a hospital, school, offices and recreational facilities.

“What made sense for us was to go and create new destinations from scratch, provide the infrastructure, provide the development control guidelines and create new commercial urban development nodes,” says Mworia.

International flavour

French hypermarket chain Carrefour is the anchor tenant for the Two Rivers Mall which has also attracted Austrian jewellery brand Swarovski and health club chain Virgin Active. Mworia says 43% of the lettable space will be taken up by international retailers, adding this is one of the project’s key differentiating factors.

“We had a lot of interest from local tenants, but we strongly felt that we needed to differentiate the offering,” he says.

Despite negative publicity surrounding the country, particularly because of corruption and terrorism, Mworia says “there is still interest among international retailers to come to Kenya”.

Although big retailers took a longer time arriving at their decisions, he explains it was not difficult to convince those who already had an interest, into taking the final step of coming to Kenya.

“The per capita spend is fairly high [and] a lot of those retailers already have Kenyan customers. The challenge for them is getting the right entry point into the market. For Carrefour, [for instance] the challenge they always faced was that our malls were too small,” Mworia explains.

But putting up a development that would appeal to international retailers was not easy. For starters, Mworia notes there is always scepticism from some retailers as to whether such an ambitious project would be successfully executed.

Due to the scale of the project, Centum faced numerous challenges. “We had a lot of consultants, foreign and local, and coordinating them was very difficult.” Eventually the company set up a subsidiary Athena Properties that handled the master planning, urban development, engineering and letting. Mid last year Centum sold a 42% stake in the development to two investors for a combined $75m.

It has also invested millions of dollars in developing infrastructure in and around the Two Rivers development. It has constructed roads to ease access, secured a dedicated high-voltage power line, invested in a sub-station, and set up a power company that will reticulate power to individual tenants.

“We have also put up a 2MW solar power plant within the development. So the whole roof of the mall is solar. And there is a 9MW energy centre that is a back-up for the entire development. Tenants [do] not need to come in with their stand-by power,” he says.

Getting feet through the door

To attract consumers, Centum has focused on creating a destination that will feature a water park with dolphins and multiple food and beverages stores aimed at consumers seeking leisure and entertainment. The company is investing $10m in security technology, which has become a major concern for shoppers following the 2013 Westgate mall attack. Two Rivers Mall will also feature 4,000 parking bays.

“Parking is a key differentiator [because in] the whole city of Nairobi the parking that is managed by the county government is [only] 6,000 spots,” says Mworia.

He adds that though it requires massive investment, good infrastructure is a competitive advantage.

“When people are looking to invest in commercial real estate the biggest barrier to entry is infrastructure. Do you have sufficient power, sewer systems, good roads and security? It is easy to see it as a challenge but it is also an opportunity for a private developer who puts up a location and then addresses these problems.”

When completed, he reckons Two Rivers Mall will attract 40,000 visitors a day, adding that Kenya is well positioned to be a retail and entertainment destination in the region.

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  • With such mega investments in the EA region, more needs to be done especially by government to ensure that the corruption and tribalism menace is drastically reduced or eliminated if possible. I am also of the opinion that in order to spur an entrepreneurial culture in Kenya, EA and Africa, some of the complicated, time consuming and tedious requirement for say licensing businesses to work permits should be relaxed a little bit and the efficiency of the processes improved.

  • Build it, and they will come. Africa needs high speed rail networks, trans-continental highway networks and massive power generation.

  • African economies are rapidly developing. And Africa today really attracts foreign investors. The African market offers more and more opportunities for investment. And the retail sector is one of the fastest growing economy in Africa. A rising demand for consumer goods, fuelled by an increase in personal income and a beaming middle class, is considered the main driver of this growth. So in West Africa the Asian investment foundation Hermes-Sojitz invests in the construction major shopping malls (100 square meters each) and 65-floors skyscraper. This is unique objects in this region.

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