The Lake Basin Mall sits on one of the most picturesque and valuable real estate locations in western Kenya: at the junction of the foothills of the mighty Nandi Hills and the ethereal Lake Victoria.
The mall sits on a net area of 45,784 square meters, with about 60,000 square feet of leasable tenant space on 5 floors. Highlights of the mall include the Best Western hotel, a showroom, a mezzanine floor with a modern food court, 350 parking slots, and a children’s play park.
Some of the anchor tenants include the Kenya Revenue Authority, Classic Vehicle Masters Ltd and the Lake Basin Development Authority (LBDA), who are the developers.
The expected yearly rental income from the leasable space is about US$2.5 million annually. The contractor on behalf of the LBDA took out a $25 million loan from the Cooperative Bank to put up the building and the loan has since accrued to $40 million. Since the mall is barely operating at an optimum capacity despite being completed almost four years ago and the LBDA is paying about US$300,000 monthly for the loan facility, the numbers don’t add up.
Let’s pretend for the while you read this article that the mall owned by the Lake Basin Development Authority (LBDA) wasn’t embroiled in such controversy that it defied logic and that the project was in fact viable from an investment perspective; a spanner is thrown in the works: the Kisumu-Vihiga highway stretch.
Why the Kisumu-Vihiga Road Matters
The stalled Kisumu-Vihiga Road directly services the main entrance to the Lake Basin Mall, with an arterial road servicing the mall’s side entrances. At this project location lies the equally stalled Mamboleo-Miwani-Chemelil road which is expected to be rehabilitated soon.
The location of this mall at this prime road junction is an indicator that a significant amount of business was expected to be generated after completion of these infrastructure works. Unfortunately, the contractor on the Kisumu-Vihiga Road had to shut down the stretch of the main road adjacent to the mall for extended periods. (Construction has finally resumed with a new contractor coming on board).
Stalled construction projects have major impact on business and are a turn-off for investors. Loans have to be repaid with interest while massive losses are incurred due to decreased economic activity or even the lack of it.
In the case of the Lake Basin mall, it is important to separate optics from reality. The impression made when one sees traffic passing by the feeder lane of the Kisumu-Vihiga road is that the mall is active and making money. However, this is far from it. If you ask any potential tenant why they haven’t rented space at the mall yet, the most likely answer you’ll get is that they are waiting for the road to be completed. If you ask from the property agent what constitutes a big part of their woes in attracting tenants, they’ll most likely cite the stalled road section of the Kisumu-Vihiga Road.
The Lake Basin Mall is just but one of the many projects silently hurting through stalled infrastructure in Kenya. – Uddi Benkiff
