Even as more shopping malls keep coming up in the country, there has been a decline in the performance of these large properties in the face of a shift towards smaller convenience centres in residential neighbourhoods. This is according to property fund ILAM Fahari I-Reit in its annual report for 2022.
The segment has also seen a sharp rise in the supply of space in recent years, leaving some malls unable to fully sell their available shops beyond the anchor units that are occupied by supermarket chains, noted the Fund.
The Fund also cited a recent report by Boston Consulting Group (BCG) which showed that a majority of Kenyan shoppers (77 percent) still prefer to buy goods at traditional retailers, commonly known as dukas.
“With over 500,000 square feet of new supply planned to hit the market in 2023, the retail centre owners are expected to devise various strategies to attract and optimally pace tenants within the malls and wade off stiff competition from the traditional dukas,” said ILAM.
“Tenants continued to renegotiate rents, and we witnessed a drop in asking rents, especially in centres with high vacancies. Market rents remained flat or reduced, and vacancies on upper floors took longer to fill during the year under review.” – Reported by Business Daily
