South Africa’s Shoprite (JSE:SHP) opened its doors in the Kenyan market for trading replacing Nakumatt at the Westgate Mall.
The 50,000-square-feet flagship store at Westgate is fitted out to the latest specification of Shoprite’s premium ‘Checkers’ brand. Shoprite, which operates more than 2700 stores in 14 countries outside of South Africa, promises a diversified product range and consistent value for shoppers in the Kenyan market.
The retailer has entered the country to strengthen its position in East Africa, with Kenya being the region’s strongest economy. Shoprite will open at Garden City in early 2019 and will follow up on other opportunities in the city as they become available, in addition to the potential for future expansion outside of the capital.
Gerhard Fritz, Shoprite’s head of operations outside South Africa says “Due to the aggressive expansion of Carrefour there are no cheap sites left behind with the demise of Nakumatt and Uchumi. We have declined some sites as we feel rentals are too high. Landlords are having a field day playing each off against each other.”
Cytonn Investments collaborates the statement noting that “The retail sector continues to record increased supply of retail space within Nairobi with an 8-year CAGR of 15.9%, from 2.0 mn SQFT in 2010 to 6.5 mn SQFT in 2018. This has, however, resulted in an oversupply of 2.0 mn SQFT space as at Q3’2018, hence the need for developers to differentiate their retail space offering to attract tenants.”
Ben Woodhams, Managing Director at Knight Frank Kenya, said: “We are delighted that Shoprite has chosen to launch in Kenya with the premium Checkers level of fit-out at the Westgate Shopping Mall, and I believe shoppers will be impressed by the quality of this fantastic new store – a real first for Kenya.”
Westgate Shopping Mall now has a Gross Lettable Area of 267,881 sq ft following the completion of Phase II of the restoration.
The second phase of restoration opened officially for trading on October 16, adding over 82,000 sq ft to the shopping centre development. The shopping mall is built to the highest international standards and the development would stand out in any part of the world.
Knight Frank Kenya has also signed up Miniso for Westgate, which has opened alongside other flagship outlets for international retail brands such as Mango, Hugo Boss, Lacoste and Grill Shack in the newly added prime retail space.
Other global retailers have who pitched tent in Kenya include French retailer Carrefour SA, and Choppies (JSE:CHP) of Botswana are also seeking to fill space left by the debt-ridden company and state-backed Uchumi Supermarkets, which is facing a winding-up petition.
Further, the Ksh 3.0 bn Waterfront Mall opened in Karen bringing to the market 200,000 SQFT of lettable retail space and 1,000 parking bays and will have South African retailer Game Stores as the anchor tenant.
This is the fourth mall to be opened up in the area, in addition to; The Hub, Karen Crossroads, and Galleria, whose sizes are 322,917 SQFT, 85,035 SQFT and 158,229 SQFT and were opened in 2016, 2005 and 2011, respectively.
The continued investment in malls in the area is attributed to the above market average performance of Karen’s retail sector, which according to Cytonn’s Kenya Retail Sector Report 2018, recorded an average rental yield of 10.8%, 1.4% points higher than the market average of 9.4%, with an average occupancy rate of 96.0% compared to the market average at 83.7%.
“We attribute the performance to the prime location of Karen as a retail centre, with an affluent population with relatively high purchasing power, and less competition in the market compared to low end areas, where malls compete with second tier supermarkets and stalls, thus developers are able to charge premium rents of Kshs 212.8 per SQFT on average, compared to the market average rent of Kshs 178.9 per SQFT,” said Cytonn Investments.
Additional updates from Cytonn Investments