Retail Sector
Charting the Evolution of Mombasa's Retail Sector
Mombasa has the second largest mall space supply in Kenya with 1.4mn SQFT, after Nairobi, which has 6.5 mn SQFT.
The retail sector in Mombasa recorded an improvement in performance from 2016 to 2018, in terms of occupancy rates, which increased by 7.2% points on average, annually from 82.0% to 96.3%
Nakumatt, which was predominantly the main retailer in a majority of the malls in Mombasa has paved the way for entry of other local retail giants such as Naivas as well as international retailers such as Shoprite, through its exit from the market. Construction Permits (CPs) Inspections Occupancy Certificates (OCs).
The demand has been spurred by a positive demographic dividend, a growing middle class, a rebound in the tourism sector, and local retailers such as Tuskys and Naivas that are keen on expanding their national footprint.
Nakumatt, which was predominantly the main retailer in a majority of the malls in Mombasa has paved the way for the entry of other local retail giants such as Naivas, Chanadarana's Foodplus as well as international retailers such as Shoprite, through its exit from market.
Moreover, several international retailers have announced plans to expand to Mombasa including LC Waikiki, Domino’s Pizza, Coldstone, and Shoprite. Mombasa has the second largest mall space supply in Kenya with 1.4mn SQFT, after Nairobi, which has 6.5 mn SQFT.
New malls in the region include the Mwembe Mall in Mwembe Tayari measuring 135,600 SQFT, which was completed by November 2018, and the Airport Mall in Changamwe measuring 172,000 SQFT, which is under construction and expected to be operational by the mid-2019.
Mombasa was the first County to launch an e-Construction Permit in 2015, automating the application and review procedures for processing Construction Permits (CPs), Inspections, and Occupancy Certificates (OCs).
This allows developers and architects to conveniently submit their plans online for vetting and approval.
Mombasa has a well-developed construction sector with around 40 reputable contractors listed by the Architects Association of Kenya, which also has a branch in Mombasa.
In 2016, the market recorded average occupancy rates of 82.0%, with average rental yields of 8.9%. In 2018, the occupancy rates came in at 96.3% on average, with rental yields of 8.3%.
For investors, the opportunity is in the retail sector as it is undersupplied:
Malls in Mombasa are more concentrated in one area, i.e. Nyali and its close environs. Thus, the opportunity is in select residential areas that have no mall space such as Tudor, Changamwe, and Likoni Shelly Beach Road areas. On account of:
(i) Increasing middle class
(ii) lack of supply to serve the upcoming middle-class residential estates
(iii) Increasing residential population..