KENYA – Carrefour Kenya, operated by Dubai-based conglomerate, Majid Al Futtaim is set to open its eight store in June following the signing of lease deal for the refurbished Nairobi Mega property along Uhuru Highway between the retailer and the property owner, automobile dealer Car & General.
This was revealed by Car & General in its half-year financial report, that Carrefour will be the anchor tenant at the property which was formerly occupied by the once-dominant Nakumatt.
“We have completed the refurbishment of Nairobi Mega (formerly Nakumatt Mega), which comprises 170,000 square feet including car parking. Carrefour will be the anchor tenant and expect to open in June,” Car & General said in the report.
The retailer had scheduled opening of the branch in March, but had to postpone due to the delayed refurbishment blamed on coronavirus disruptions.
Leasing of the property to Carrefour signals the move by the automobiles dealer to diversify its business at a time coronavirus pandemic is expected to hurt its revenues.
Car & General deals in importation and sale of marine engines, motorcycles and three-wheeler vehicles, and commercial engines. The firm is also rearing broiler chicken in neighbouring Tanzania.
Car & General is now betting on Carrefour’s tenancy to increase its profits at a time decline in demand and restrictions on movements to curb spread of the coronavirus have hit its poultry business in Tanzania.
Competition in Kenya’s retail sector is accelerating with various retailers making plans of expansion also attributed to the increase in mall/rental spaces.
According to the Kenya Retail Real Estate Sector report 2019 by Cytonn investment, the retail sector recorded a 1.1 million SQFT increase in mall space in 2018, leading to a supply of 12.5 million SQFT in 2019 from 11.4 million SQFT in 2018.
Even with the rise in rental spaces, the occupancy rates declined by 8.7percent points to 77.3percent in 2019, from 86.0percent in 2018.
Amid the growing retail sector various retailers in Kenya have embarked on downsizing measures largely due to financial constraints that result from poor governance and oversight coupled by tight competition in the sector.
This can be seen with the case of Uchumi, Nakumatt Holdings which was liquidated, Choppies which is in the processes of exiting the market, Shopite holdings which is evaluating its operations in East Africa and recently Tuskys which is on the radar for delaying supplier and rent payments on cash flow hitch.