NAIROBI, Kenya August 29 – Kenyan developers have accelerated their shift towards sustainable designs in their projects due to increased demand as many multinational corporations expand into Kenya, a new report shows.
According to Knight Frank’s H1 2022 Kenya Market Update, investors in office properties are increasingly incorporating environmental sustainability aspects into their designs to enhance resource efficiency and low carbon footprints.
The Cube, Promenade, Absa Bank, Caxton House, and PTA Complex are amongst properties that have attained coveted EDGE or LEED certifications.
The report indicates that with Kenya’s growing digital industry and interest by technology giants, there is an attractive investment opportunity in smart offices that go beyond the physical building to provide amenities such as occupancy sensors, water-efficient solutions, meeting room, and parking solutions, that are delivered to international standards.
Some of the firms investing in innovation hubs in Nairobi include Microsoft Africa Development Centre, Visa’s innovation studio, Google’s Africa product development hub and Amazon Web’s AWS Local Zone Hub.
“The expectation for sustainable buildings by multinationals is creating a fresh opportunity for real estate investors in this market. It is the future of the industry globally and we expect it to continue growing in demand even by local businesses,” said Anthony Havelock, Head of Capital Markets and OLSS, Knight Frank Kenya.
The report indicates that while the supply of commercial space is expected to continue in 2022, no major office developments are expected to enter the Nairobi market in 2023.
This, it warns, could potentially drive up occupancy rates and prime rents of office buildings, most companies having either resumed working from office or adopting a hybrid version with the ebbing of the pandemic.
Presently, the average monthly prime rent has stabilised at USD1.20(Sh144) per square foot per month, with many landlords preferring rental payments in dollars, due to the depreciating Kenya shilling.
Prime residential rents declined by 2.23 per cent during the first half of 2022 compared to 1.58 per cent over the same period in 2021.
This is attributed to the continued oversupply and effects of the rise in cost of living.
The market remains a tenant’s market, implying that landlords will continue to provide various concessions in an effort to have high occupancies.
On the sale front, prime residential sale prices improved marginally by 1.2 per cent in the first half of 2022. This is attributable to the post pandemic reopening of the economy.
Though positive, this increase is lower than the 2.4 per cent rise during the first six months to Q1 2022, due to the August general elections, causing a cooling of the economy.
In the retail market, supermarket chains remained highly acquisitive as they opened new branches in more convenience led destinations to tap into densely populated areas within certain residential locations.
This included Naivas and Quickmart, with Chandarana following suit, a departure from its favoured mall strategy. This trend is expected to continue, despite the increasing cost of living.
