South African industrial property developer Improvon and Pan-African private equity group Actis, are building the biggest industrial real-estate investment in Kenya.
The Nairobi Gate development, which is expected to open at the end of March next year, will be located about 15 kilometres from Nairobi’s CBD in Ruiru’s Northlands City precincts, a mixed-use project.
Nairobi Gate industrial park will comprise of two buildings each covering 5,000 square metres in size. Actis and Improvon have created a joint venture called ImpAct to build the 10,000 square metre industrial business park development at an estimated cost of KES 11.3bn. ImpAct is providing the entire infrastructure around Nairobi Gate
The Kenyan property market is in short supply of top-grade industrial facilities. Most industrial space available is small-scale warehousing of substandard quality according to manufacturers, e-commerce companies and pharmaceutical suppliers.
Improvon CEO Stefano Contardo said Kenya stood out as an African country to invest in while SA struggled with economic weakness and political squabbles. Kenya is forecast to grow at nearly 6 percent in 2019.
The development is Improvon’s first in Kenya. The company already operates a business park in Zambia.
“Africa carries risks everywhere but conditions are improving. We have found that while SA struggles and looks slightly sketchy, other parts of the continent are looking more attractive. Kenya stands out for many reasons,” Contardo said.
“Some SA companies have established themselves there already and can be tenants for our development, Kenyan businesses understand English, they are dollar based and the market is not too competitive so we can do good work there,” he said.
Improvon has for 25 years built capacity to develop and let logistics and warehouse space in large industrial nodes in South Africa. Contardo said the company had considered listing a few years ago to raise capital to expand. The listing did not go ahead but the company found a strong partner in Actis which had decades of experience in investing in Africa, he said.
Louis Deppe, partner for real estate at Actis, said he was confident that Nairobi Gate would be a success and that a similar design could be replicated in other African countries.