October’s real estate roundup

Cytonn Investments, an investments management firm and real estate developer, handed over Phase 2 of its Sh5b comprehensive residential development, The Alma, located in Ruaka. 

This follows the handing over of its Phase 1 in July 2019, bringing the total number of handed over units to 181. 

The Alma is a comprehensive residential development sitting on 4.7 acres with approximately 477 units of 1, 2, and 3 bedroom units. 

The developer’s focus on the Ruaka submarket is supported by, among others, good transport network as the area is accessible through Limuru Road and Northern By-pass which links it to Kiambu Road, presence of international organizations such as the United Nations in Gigiri, which has attracted foreigners who not only boost the appeal of the town, but also create a market for residential and commercial real estate, improved security as the area is close to blue diplomatic zones in addition to county measures,  

Other factors making Ruaka attractive to real estate development include availability of social amenities such as the Two Rivers Mall, Village Market and The Tribe Hotel, and, relaxation of zoning restrictions resulting in an increase in high density developments that have brought about improvements in the value of real estate property. 

In terms of performance as per Cytonn’s Nairobi Metropolitan Area 2020 Residential Report, Ruaka was the third best performing node in the lower mid-end satellite towns recording an average yields of 5.5%, 0.1% higher than the market average of 5.4%, a price appreciation of 0.1% and total returns of 5.6%, 0.2% points higher than the market average of 5.4%.

Performance of lower mid-end satellite tows.

Gateway Real Estate Africa, a Mauritius-based real estate developer partnered with Verdant Ventures, a United States-based real estate development company, in a new housing project in Rosslyn off Limuru Road, dubbed Rosslyn Ridge Residences. 

The project will comprise of 90 diplomatic apartments and a town home community-housing complex meant for the USA states department. Rosslyn is an attractive area for residential developments especially diplomats since the area is also categorized as a Blue Diplomatic Zone, is close to amenities such as Rosslyn Riviera Mall and Two Rivers Mall, and is easily of accessible through the Limuru and Kiambu roads. 

The Alma

In terms of performance, according to the Cytonn Q3’2020 Markets Review, Rosslyn was the best performing node in the high-end segment of detached units recording an average rental yield of 4.5%, 0.8% points higher than the market average of 3.7%. However, the sale prices stagnated during the period attributed to decline in demand amid reduced disposable income in the wake of a tough financial environment.

Performance of Nairobi Metropolitan Area (NMA) – detached units in the high-end areas (All values in Kshs unless stated otherwise)

Centum investments, through its real estate arm, announced plans to issue a Sh4b bond with the possibility of taking up to Sh6b should the investors’ appetite exceed the targeted sum. The bond, which will be used to finance its real estate projects, is currently undergoing the necessary approvals and it is expected to be issued in the next few weeks. 

According to the company’s management, the three year bond will be issued as a private placement with zero coupon, however, it will later be introduced at the Nairobi Stock Exchange (NSE) for trading. The yield will be competitively determined by the market. 

The bonds will be secured by the current projects that the company is handling with the pools of deposits collected flowing into a sinking fund as a strategy to protect the bond holder’s funds. Some of the company’s real estate projects include; Two-Rivers Mall along Limuru Road, Awali Estate at Vipingo Ridge Kilifi County, Perl Marina apartments in Entebbe, 265 Elmer One Apartments in Kasarani, and 365 Pavilion Place Apartments in Ruaraka.

The move by Centum to issue a bond is an indication that developers have continued to explore diversified sources of financing for their real estate projects.  Bonds are a source of debt capital for businesses that are well established and need funds for long-term growth. The company can raise funds by selling bonds to different buyers and sharing profits from the projects for which bonds are issued. An example of a developer who has also resulted to bonds to raise funds is Acorn Group, which floated a green bond in 2019. The five-year bond whose rate stood at 12.3% received 85% subscription as of October 2019 raising approximately Sh4.3b. 

Currently, approximately 95% of business funding is sourced from banks compared to approximately 5% from the capital markets, mainly due to underdevelopment of the latter. 

However, the market has continued to witness emerging structured financing options such as real estate structured notes which may include project notes, real estate-backed medium term notes and other high yield loan notes, and; Real Estate Investment Trusts (REITS).  We expect the trend to continue as developers seek for relatively affordable funding for their projects.

Shelter Afrique, a Pan-African housing lender and real estate developer announced that Kenya will be among six African countries expected to benefit from a multi-billion shilling affordable housing kitty targeting end users residents. The announcement came in during the approval ceremony of a 10,000-unit affordable housing project in Kinyinya Park Estate development in Rwanda’s capital, Kigali in partnership with Rwanda Social Security Board (RSSB). In Kenya, the lender is currently involved in projects such as Eden Beach in Mombasa, and, Edenvale in Nairobi,

Unity Homes, a Kenyan-British housing developer, partnered with South Korea’s KumKang Kind, a construction materials company, to fast track delivery of 1,200 units in the Sh4.5b project dubbed Unity West at Ruiru’s Tatu City.

Kenya Power Pension Fund (KPPF) announced plans to put up a Sh2.3b residential apartments on its 1.67- acre plot along Kirichwa Road in Nairobi’s Kilimani area. 

Kenya Mortgage Refinance Company (KMRC), a Treasury backed lender, signed an agreement that will see the African Development Bank (AfDB) guarantee its first bond issue, planned for the third quarter of next year. 

Centum Investments handed over the first 96 units in two of its master-planned developments, Awali and Pearl Marina Estates in Kilifi and Entebe, respectively. 

The residential sector is expected to record increased activities supported by key partnerships among developers, launch of new residential projects fueled by demand amid a housing deficit, and lending by Kenya Mortgage and Refinance Company (KMRC) which is expected to boost the mortgage market.  


Tuskys Supermarket, a local retail chain, shut down its Shiloah, Kakamega branch due to mounting rental arrears and suppliers’ debts. This follows the closure of the Ronald Ngala branch along the Nairobi CBD earlier bringing the number of operational outlets to 54. The closure emphasizes the ongoing financial constrains by the retailer due to strained revenues as a result of reduced demand and family wrangles among the shareholders thus affecting its operations. 

This comes despite reports of securing financial support amounting to Sh2b from an undisclosed Mauritius-based private equity fund, in which Sh500m was allegedly injected in September 2020 to pay off landlords, suppliers, and other immediate working capital requirements. The recent closure of its outlets indicates recurrent financial woes and hence the need to mobilize more funds to stabilize its operations and ease the financial pressure.

A summary of the number of stores of the key local and international retail supermarket chains in Kenya;

Naivas supermarket, a local retail chain, announced plans to open four new retail stores to be located at Lifestyle Mall in Nairobi’s CBD, Rongai, and two other undisclosed locations. 

Big Square, a fast-food retail chain, opened its second branch outside Nairobi, in Eldoret at Rupa’s Mall, bringing the total number of stores operated by the retail chain to 12. 

Despite the continued exit by troubled retailers such as Tuskys, the performance of the retail sector is likely to be cushioned mainly by expansion of local and international retailers such as Naivas, taking up prime spaces left behind by struggling retailers. 

Other factors expected to boost the sector include but not limited to changing tastes and preferences of consumers, growing middle class with higher purchasing power, and, positive demographics with Kenya’s current urbanization and population growth rates at 4% and 2.2% against a global average of 1.9% and 1.1%, respectively, according to the World Bank. 

The performance is however likely to be constrained by the existing oversupply of 2.8m sqft of retail space as of 2019, competition from informal retail spaces in some submarkets, and, the growing focus on e-commerce thus affecting demand for physical retail space.


Hyatt, a US-based hospitality chain announced plans to build a 225-room facility in Nairobi along Mombasa road, marking the brand’s entry into the Kenya hospitality market. 

The development will comprise of 150 rooms and 75 residential units targeting tourists jetting into the country through Jomo Kenyatta International Airport (JKIA). The move indicates investor confidence in the Kenya hospitality industry despite being significantly hit by the COVID-19 pandemic in the past seven months. 

Currently, the sector is undergoing gradual recovery supported by government strategies such as the Ministry of Tourism Post-Corona recovery funds aimed at offering financial aid to hotel and other establishments in the hospitality industry through the Tourism Finance Corporation (TFC), repackaging of the tourism sector products to appeal to domestic tourists, and relaxation of travel advisories aiming at increasing the number of international tourist arrivals into the country.

Others factors boosting the hospitality sector include recognition of Kenya as a regional hub, improved security, political stability and positive accolades such as Nairobi city being crowned Africa’s leading Business Travel destination while KICC was awarded the Africa’s leading meetings and conference center during the 2019 World Travel Awards.

During the month, the government of the United States of America, through the United States Agency for International Development (USAID), announced plans to inject approximately Sh750m into Kenya’s tourism sector in support of the tourism recovery efforts. 

Despite the sector being the hardest hit by the COVID-19 pandemic given its reliance on tourism and meetings, incentives, conferences and exhibitions (MICE), the hospitality sector has continued to recover.

We expect this to fuel resumption of activities and resultant improved performance in the medium term thus continued investor confidence.   

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