Kenya: State to construct $83 million mixed-use facility in Nakuru

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  • Local Authorities Pension Fund (LAPF) Kenya has announced plans to construct a mixed-use facility  at an estimated cost of KSh 10.0 billion ($83 million) in Nakuru County
  • The mixed-use facility will comprise a shopping mall, a five-star hotel, a warehouse block, residential apartments, a kindergarten school, a petrol station, and an amusement park
  • The facility’s construction, which will be done in phases for an undisclosed period, will add to the pension administrator’s investment assets, currently over KSh 51.6 billion
  • A mixed-use building aims to combine three or more uses into one structure, such as residential, hotel, retail, parking, transportation, cultural, and entertainment

Local Authorities Pension Fund (LAPF) Kenya has announced plans to construct a mixed-use facility at an estimated cost of KSh 10.0 billion ($83 million) in Nakuru County.

The mixed-use facility will comprise a shopping mall, a five-star hotel, a warehouse block, residential apartments, a kindergarten school, a petrol station, and an amusement park.

The facility’s construction, which will be done in phases for an undisclosed period, will add to the pension administrator’s investment assets, currently over KSh 51.6 billion.

Other Real Estate properties by LAPF include the Maksembo affordable housing project consisting of 1,870 units in Kisumu County, near Kisumu International Airport and Moi Stadium.

According to an analysis by Cytonn Investments, LAPF’s decision to invest in Nakuru County is mainly driven by several factors, including rapid economic growth in the area following its upgrade into a city by President Uhuru Kenyatta in December 2021.

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The decision was also influenced by the availability of infrastructure developments, as the facility will be constructed off the busy Nakuru – Kisumu Highway. It will also be influenced by the need to expand its asset base and revenue sources by venturing into Nakuru’s property sector and Nakuru’s rapid population growth rate of 2.4% as of 2019, which in turn drives demand for goods, services, and housing units.

LAPF’s plan comes when property developer Mi Vida Homes has completed and launched the first phase of the Mi Vida housing project worth KSh 12.0 billion.

Mi Vida’s construction of the 221 apartment project began in July 2019. It was jointly done by Indian Shapoorji Pallonji Real Estate (SPRE) firm, in conjunction with British private equity firm Actis Limited. The property sits on the larger 47- acre piece of land at Garden City Thika Road.

The completion comes barely one month after Mi Vida Homes announced plans to break ground on 800 affordable housing units project worth more than KSh 2.0 billion in Nairobi’s Riruta area by the end of the year, signifying the investors’ appetite for the Kenyan property market.

The increased appetite for Mixed–Use Development can be attributed to the segment’s good returns.

According to Cytonn’s Nairobi Metropolitan Area Mixed-Use Developments Report 2021, MUDs recorded an average rental yield of 7.2 per cent in 2021, 0.7 per cent points higher than the respective single-use, retail, commercial office and residential themes with an average yield of 6.5%.

This was mainly attributed to their convenience, which incorporates working, shopping and living spaces, thus preferred by many investors.

Nakuru County. Photo: Kenya Insights.

Commenting on the development, Cytonn said they expect the mixed-use development sector performance to continue being on an upward trajectory due to their convenience, thus more preferred as opposed to the single-use theme developments, coupled with the adequate amenities available leading to their increased demand.

This is in addition to Kenya’s recognition as a regional hub, thus attracting foreign investments and the overall development and performance of the sector.

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What is a mixed-use facility?

According to experts, a mixed-use building aims to combine three or more uses into one structure, such as residential, hotel, retail, parking, transportation, cultural, and entertainment. It brings together several uses within either one building or a small area.

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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