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Nairobi among top Africa investment capitals - Knight rank
This has pushed the up prime residential prices by 3.5 per cent in the past year
In Summary
This is due to advanced technology, robust financial sector and strategic geographic location.
According to DCByte, the major data centre additions in 2021 were in Johannesburg, Lagos and Nairobi.
An aerial view of Nairobi City.
Image: FILE
Nairobi remains among Africa's top foreign investment destinations due to advanced technology, robust financial sector and strategic geographic location, a new report shows. In the East Africa region, Kenya's capital ranks top but is beaten by South Africa, Nigeria and Tunisia in the continent, the Knight Frank report shows.
Nairobi's attractiveness has pushed the up prime residential prices by 3.5 per cent in the past year with average office occupancy at 73 per cent, the highest in the continent.
In May, the firm ranked Kenya's capital as the leading destination for real estate investments in Africa in its Prime Global Cities Index –Q1 2022 report.
Nairobi was placed at position 32 out of the 45 sampled cities, with a capital appreciation of 1.3 per cent quarter on quarter and 3.5 per cent year on year.
Increased demand for housing resulting from several factors, including a growing middle-income class, drove performance.
Kenya's capital city was ahead of Cape Town which was second, Kampala third with Cairo and Johannesburg at fourth and fifth place respectively.
Dubai is the city with the fastest rising prime prices in the review period with a 58.9 percent change recorded in the 12 months, and a 23.2 per cent change in six months from the third quarter of 2021 to the first quarter of 2022.
According to DCByte, the major data centre additions in 2021 were in Johannesburg, Lagos and Nairobi.
These locations, together with Cairo and Casablanca, are regarded as being the top five key data centre markets in Africa.
The firm classifies these countries as key hub locations in Africa, mainly because of their economic potential.
Generally, attracting meaningful volumes of institutional capital into Africa continues to prove challenging and recent global macroeconomic events appear to be hampering matters further.
Indeed, total cross-border investment in African commercial real estate stood at $274 million in 2021, down 49 per cent from 2020 and 54 per cent lower than 2019 figures.
Factors that influence capital flows include political outlooks and environmental risk.
In addition, monetary tightening in the United States and rising risk premiums associated with the war in Ukraine, have placed downward pressure on exchange rates in the continent.
The report says that although real estate investors have mitigated this risk by deploying their capital in projects that have dollar-denominated returns, where possible.
According to the 2022 IMF-Regional Economic outlook for Sub-Saharan Africa, inflation is expected to remain elevated in 2022 at 12.2 per cent before easing to 9.6 per cent in 2023 though there is significant heterogeneity across the region.
Real estate is traditionally seen as an inflation hedge and so an inflationary environment is likely to boost demand.
Climate change to poses extreme challenges for the region given its exposure to weather-related events and the reliance on rain-fed agriculture.
Knight Frank says investment in adaptation is therefore of paramount importance, but the green transition also provides new opportunities for Africa given its potential for renewable energy.
The report notes that Environmental, Social, and Corporate Governance (ESG) is an increasingly global focus for real estate investors, and expects this to spur capital flows towards green-rated buildings.
Africa has 785 green-rated buildings, 641 of which are in South Africa alone.
The continent's real estate market is recovering despite volatilities in the global market.
''With economies slowly limping back to life and international travel resuming, expatriates and tourists are returning, which is boosting demand and the performance of the residential sector as job levels recover,'' the report reads.
Indeed, in Lagos, rents currently stand 22 per cent higher than they were in 2019, while Cape Town (13 per cent) and Nairobi five per cent) have also registered increases over the same period.
These strong increases are likely to be curbed as housing demand in many cities is starting to shift away from city centers to the suburbs primarily due to affordability considerations, but also due to the relative gain in indoor and outdoor space.
''With inflation continuing to edge upwards, affordability is expected to come into an even sharper focus, especially as real household incomes continue to be eroded,'' Knight Frank says.
In Kenya, an undersupply of formal student housing has seen developers responding by developing purpose-built student accommodation (PBSA).
Knight Frank Kenya Kenya CEO Mark Dunford says those who invest in underserved niches will reap huge dividends.
"With the mainstream market still suffering from an undersupply of affordable housing, demand for co-living is likely to continue rising for the foreseeable future. Investors find this sector attractive because of its resilience and strong long-term economic fundamentals,'' Dunford said.
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The Port of Mombasa is staring at a new threat from South Sudan, with fresh clamour to transfer business to the Djibouti route, in what will deny Kenya revenue on 1.1 million tonnes of cargo that the facility handles annually.
Mombasa has been the main route for all consignments destined to the landlocked country and South Sudan now says Port of Djibouti is shorter.
“We are in talks with Djibouti authorities so that we can connect Djibouti, Ethiopia, and South Sudan to use Djibouti port through Ethiopia," deputy chairperson for Chamber of Commerce in South Sudan Lado Lukak Legge was quoted saying by the media in Sudan.
“Djibouti is near to South Sudan compared to Mombasa port in Kenya and the government of Djibouti is willing to strengthen trade ties with South Sudan and Ethiopia,” he said.
Foreign Affairs principal secretary Macharia Kamau told Business Daily the push is not yet a concern to Kenya.
The South Sudanese embassy in Nairobi did not respond to our inquiries on the country's official position on the matter.
South Sudan is second after Uganda in the use of Mombasa port, accounting for 9.9 percent of transit volumes. Uganda accounts for 83 percent of all throughput cargo followed by the Democratic Republic of the Congo, Tanzania and Rwanda at 7.2, 3.2 and 2.4 percent, respectively.
The Kenya Port Authority (KPA) managing director John Mwangemi refused to comment on the matter saying that the port was not aware of the move.
“I cannot comment on that matter, we have not received any communication from South Sudan in regard to that matter,” said Amb Mwangemi.
The shift, if successful, will also hit the newly established dry ports in Naivasha and Nairobi, where cargo destined for South Sudan were supposed to be cleared at the Inland Container Depot (ICD).
Just recently, Kenya and South Sudan agreed to clear cargo destined to Juba in Nairobi starting this month.
In 2019, President Uhuru Kenyatta announced that Kenya would allocate South Sudan 10 acres of land for construction of a dry port at the Naivasha special economic zone. The land, which acted as an incentive to have Juba use Kenya as a transit route for its cargo, was meant to ease the movement of goods to the neighbouring nation.
Kenya and South Sudan have over the years been working towards the completion of transnational highways, including the Eldoret-Lokichoggio-Nadapal-Kapoeta-Torit-Juba Road that would ease the movement of cargo between the two countries.
Kenya has also been fast-tracking the completion of the Lamu Port South Sudan Ethiopia (Lapsset), oil pipeline and the Lamu Port to link the two countries.
This comes at a time some shippers have been avoiding the Northern Corridor, which connects cargo from the port of Mombasa to Juba, Kigali, Kampala as well as DRC, and now shifting their cargo to the Central Corridor.
The Central Corridor, which is 1,300km long, begins at the port of Dar es Salaam and serves Tanzania, Zambia, Rwanda, Burundi, Uganda and Eastern DRC. The northern corridor is 1,700 kilometres long.
The move by DRC to join East African Community (EAC) also poses a threat to the Port of Mombasa as it is slowly shifting the cargo that passes through the northern Corridor to the Central route to Kinshasa.
Dennis Ombok, former chief executive officer of the Kenya Transporters Association, said there are many factors that will determine whether Mombasa will remain relevant to cargo destined to DRC.
“Things like road tolls, transit period and traffic situations are some of the factors that transporters will use to determine the route that they would want to use and Mombasa has to up its game or lose this business to Tanzania,” said Mr Ombok.
Mr Ombok said the incentives at the ports will also play a key role in determining the effective route for transporters.
“Truckers will also be keen on incentives at the ports such as free storage period and lower charges to decide whether to use the port of Dar es Salaam or Mombasa,” he said.
Prior to admission, EAC States had to pay tariffs to either import or export goods to DRC because of the external tariff that was applicable.
Wild animals kill 49 people in Ngorongoro in six years
THURSDAY JUNE 30 2022
Lions are seen in Ngorongoro Ngorongoro Conservation Area. PHOTO | COURTESY
Summary
Addressing reporters yesterday, Ministry of Natural Resources and Tourism’s Wildlife director Maurus Msuha said 170 others were also injured by wild animals in the World Heritage Site while 842 livestock were killed in the same period.
Arusha. Some 49 people were killed by wild animals between 2015 and 2021 in Ngorongoro, the government revealed yesterday, stressing the need to protect the residents in the protected area.
The government is currently holding “a voluntary relocation” of the Ngorongoro residents to Handeni District in Tanga, as part of efforts to heighten conservation in the reserved area and improve living standards of the pastoral communities.
Addressing reporters yesterday, Ministry of Natural Resources and Tourism’s Wildlife director Maurus Msuha said 170 others were also injured by wild animals in the World Heritage Site while 842 livestock were killed in the same period.
“We are looking at a sustainable way to conserve Ngorongoro and at the same time improve the living standards of our fellow Tanzanians. They deserve education, health facilities, water, electricity and other services but unfortunately these are limited in the protected areas,” said Dr Msuha who presented during awareness seminar.
Ngorongoro is home to three ethnic groups namely Hadzabe, Datoga and Maasai who account for the largest share of the community.
The government is concerned with the increasing population and livestock which it says pose a challenge on the sustainability of the reserved area which is also key for tourism.
The human population in Ngorongoro has increased from 8,000 in 1959 when the reserve was established to 110,000 in 2021, according to Dr Msuha.
The government has identified areas in Kilindi, Handeni, Simanjiro and Kiteto districts where it now wants the Ngorongoro residents to relocate to and continue with their livelihood activities peacefully.
“Many people in Ngorongoro live in poverty and illiteracy rate is almost 64 percent. About 80 percent of the livestock in Ngorongoro belong to just three percent of the residents,” said Dr Msuha.
Already some families have moved to Handeni after compensation and facilitation by the government but the relocation has been greeted by resistance from other residents and activists who do not want to leave their “ancestral land.”
“The voluntary relocation does not only involve Maasai community but also all people around there. That’s why even the Ngorongoro Conservation Area Authority (NCAA) offices were relocated to Karatu,” said the NCAA deputy conservation commissioner, Dr Christopher Timbuka.
No eviction in Loliondo
Meanwhile, Dr Msuha stressed that there was no eviction in Loliondo where the government is placing beacons to demarcate lands for conservation and that of the human activities.
Loliondo covers 4,000 square kilometres but the government says it’s protecting 1,500 square kilometres for conservation. Dr Msuha said the protected area is the source of water for about 50 percent of the Loliondo communities and the Serengeti.
“Placement of beacons for protected areas is a common practice across Tanzania especially for wildlife and forest areas,” he said.
The government recently said it has completed placing of the 424 beacons in Loliondo and alunched a 10-day operation to tackle illegal immigrants around Loliondo.
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