Nairobi retail markets have been characterised by mixed performance in 2020 according to an analysis by Cytonn highlighting retail trends in the Nairobi Metropolitan Area.

The analysis shows that retail property markets recorded an average rent per square foot of KES 168.5 compared to KES 168.6 in 2019. The area also recorded an average occupancy of 74.5% and average rental yields of 7.5% in 2020 compared to 75.1% and 8.0% in 2019 respectively.

On average, retail rental rates in Nairobi's retail markets dropped by just -0.1% while rental yields dropped by -0.5%. Occupancy dropped by -0.6%.

Nairobi Retail Markets Highlights

Karen retail has the highest rental rates at KES 215.5/SQFT up from KES 207.9/SQFT in 2019 followed by Westlands at KES 207.5/SQFT which also saw an increase in rental rates from KES 203.6/SQFT in 2019.

Consequently, Westlands has the highest rental yields for retail in 2020 at 9.8% from 9.2% in 2019, followed by Karen with 9.2% an increase of 0.1% from 2019.

Westlands also has one of the second-highest occupancy rates for retail property markets in the Nairobi Metropolitan Area at 80.9% even though this is a drop from 84.6% in 2019.

Kilimani recorded the highest occupancy of the markets surveyed with an occupancy of 83.0%, which was also lower than the 2019 rate of 87.2%.

Karen, Kiambu Road, Mombasa Road and Satelite towns recorded an increase in occupancy rates in 2020 from 2019 with Mombasa Road recording the highest increase of 6.8% from 2019.

Eastlands recorded the biggest drop in occupancy rates in 2020 at -5.3%. Satellite towns on the other hand offered the lowest rental rates in Nairobi retail markets averaging KES 130.0 hence an opportunity for retailers such as Naivas Supermarket to take up affordable space.

Naivas and Tuskys

Naivas has grown its branch count in 2020 by opening 5 new branches during the year. The retailer currently has 66 branches across the country.

The growing retailer has now for the first time surpassed the number of branches held by Nakumatt at its peak (65 branches). Naivas is projected to open an additional 4 branches bringing its total to 70.

It has recently announced plans to open two outlets to be located at Lifestyle Mall along Nairobi CBD’s Monrovia Street, a space previously occupied by Nakumatt. Conversely, Tuskys has had to close 14 branches during the year, with an additional 27 branches set for closure.

The struggling retailer is expected to cut the number of branches in its portfolio from the current 52 to 25 branches.

Nairobi Retail Supply

The retail markets are estimated to have an oversupply of about 3.1 million SQFT as at 2020 according to Cytonn.

Kearney’s Global Retail Development Index in March 2020 revealed that Nairobi has the largest supply of available space in sub-Saharan Africa. As of February 2019, the city had approximately 530,000 sqm, more than triple the supply in other top cities like Kampala (170,000 sqm), Lagos (150,000 sqm), Addis Ababa (60,000 sqm), Dakar (170,000 sqm) and Kinshasa (170,000 sqm).