Increased investment in mall across major cities and towns has birthed intense competition for tenants who benefit from lower rents and other favorable lease terms at the expense of developers.
Grit Real Estate Income Group is a Mauritius based multinational that acquired a 50% stake of Buffalo Mall in 2016 for a reported KShs 450 million.
The group disclosed these statements when giving investors an insight into the local property market ahead of its plans to list on the London Stock Exchange by the end of July.
Retail chain giant is the anchor tenant of the mall at the 6,121 square meter mall, which has 30+ other commercial renters with a vacancy rate of 1.7%
The group through their advisory and valuation services provider Broll, says “many of the tenants at the centre have been offered a rental reduction or a rent free period to lessen the rent burden on the smaller line shops.”
“As per the budget provided the current rent rebates amount to around 18 per cent of total annual income.”
The trend of reducing rents is expected to continue throughout the year and the country.
Malls in Nairobi, where quality properties are currently charging monthly average rents of between $32.5 (Sh3,250) and $48 (Sh4,800) per square metre, are facing the highest pressure to reduce their lease fees as more properties are opened.
Estimated formal retail supply in Nairobi and Mombasa has grown rapidly in the past few years to stand at the current 630,000 and 80,000 square metres respectively, according to Grit.