Over the last few years, the Nairobi real estate market has faced growing demand for office space.
At the same time, the focus has shifted away from the City Centre with places like Mombasa Road, Upperhill and Ngong Road fast becoming favourites for companies buying or putting up office complexes.
A sale in its final stages put Upperhill firmly at the top of the pyramid with what is touted as the country’s single biggest transaction.
Delta Corp East Africa has completed the sale of Delta Centre, a 21-storey office complex, to the World Bank and the International Finance Corporation for a staggering Sh2.2 billion.
The building, still under construction, was initially intended for rental but once the World Bank stepped in, the decision to sell was made.
In fliers put out by the sales agent, Lloyd Masika, Delta Centre has been described as an “office block for rent” with a lease term of six years.
A rider on the fliers states: “The building will have standby generators, provision for installation of air conditioning, ample water supply, telephone and computer cabling as well as main fibre optic network.”
Other specifications for the building include 13 office floors. Retail space is projected to let for Sh115 per square foot while Sh80 per square foot per month will be the cost for office rental. The building has 145,260 square feet total office area.
The deal for the building comes with different expectations, according to Lloyd Masika’s Timothy Mutisya.
“It is the biggest single transaction in the local market,” says Mutisya, who brokered the deal.
This is especially so since the Bretton Woods institution is more often than not looked upon in matters economic.
Its settling for such an investment in the Kenyan real estate market is in itself a positive note for an industry that has been faced in recent times with the challenges of rising property prices, fuelled by, among other factors, the rising cost of construction materials and skyrocketing land prices.
“The negotiations have been going on for about a year,” said Mutisya.
The construction of office complexes has attracted the attention in the Knight Frank report of 2011 which noted: “The promulgation of the new Constitution led to a recovery in confidence and improved optimism about the future from both local and international investors.
The major decentralised office nodes of Westlands, Upperhill, Riverside, Karen and Gigiri have continued to witness a considerable amount of prime office development, notably Riverside, Delta Corner and KMA Centre.
The new accommodation has been let at a steady rate and Grade A office rents have increased.”
Delta Corp East Africa is co-owned by Delta Corp, which has a 40 per cent stake, and Reliance Industries. In its 2010/2011 report, Delta Corp states that it had finalised the selling of its prime property, ‘Delta Centre’ to the World bank for $22.8 million in May this year.
In another past annual report, 2009/2010, the company describes East Africa as “one of the most promising regions across the world”, with the real estate opportunity predicted to grow as the region grows.
Here the report further sets out that their focus was on the real estate sector in Kenya where they are present through Delta Corp East Africa Limited, describing themselves as “the largest real estate developers in terms of square footage in Nairobi.”