This archive report was first published on 20 July 2021.
July 20, 2021 - Nairobi's office market is facing a glut, prompting external real estate investors to shift their focus to the industrial and logistics sector.
According to Gerhard Zeelie, head of property finance for Africa at Nedbank, there is uncertainty over the long-term prospects of demand for office space across the continent.
"We think that the industrial sector is well-positioned for growth," Mr. Zeelie said, highlighting the potential for specialized distribution and logistics facilities.
Nedbank, which operates a representative office in Kenya, has largely financed shopping centers and industrial developments in the country.
However, local lenders have been cautious when lending to the real estate sector due to a high rate of defaults, leading to an increase in repossessions and auctions of property.
Annualized growth in credit to the sector slowed down from 9.1 percent in November 2020 to 5.8 percent in April, according to Central Bank of Kenya data.
Mr. Zeelie emphasized the need for developers to balance supply and demand by avoiding speculative construction and repurposing some of their space to fit current demand.
