The Next Wave of Enterprise Growth
The population of Africa is growing significantly faster than any other region in the world. Underpinned by long-term demographic and economic growth, and rapid urbanisation of over 4%, there is an increasing amount of retail development activity on the continent. Cities such as Dar es Salaam, Nairobi, Kampala and Lusaka are among the fastest growing metropolitan cities in the world.
With the growth in addressable population in East Africa, this has undoubtedly been the driving force for massive demand for retail space and associated warehousing.
Booming Retail Floor Space
According to Knight Frank research, Nairobi, Dar es Salaam, and Maputo have been identified as retail development hotspots with the largest number of shopping centres in the pipeline.
Nairobi has around 470,000 sq m of shopping centre space in the pipeline. Dar es Salaam and Maputo has seen retail development accelerate as a result of large gas discoveries offshore in the Rovuma basin, with pieplines of 235'000sq m and 193'000 sq m, respectively.
Source: Knight Frank
The entry of big-box retailers into East Africa such as Game, Carrefour, and Shoprite matched with the shortage of market supply of Grade A retail warehousing has pushed up rents. As these retailers continue to increase their presence in the region, a greater number of warehouse and distribution facilities will be required to meet the demand. The need for proper warehouse and distribution facilities arises as a greater number of retailers plan and manage their own supply chains.
Comparing logistics rent in East Africa vs. USA
The average asking rent for warehousing and logistics space in East Africa is 50% greater than the USA.
Rent in Mozambique is up to 124% greater than the USA.
The demand for warehousing comes from:
(a) Imported finished goods from Asia
(b) Raw commodities from Africa
Source: Colliers International, Knight Frank.
Sunbird is currently conducting extensive market research in Zambia, Tanzania, Kenya, and Mozambique, and has identified multiple sites for the company's retail and warehousing business model. The company has also identified ideal anchor tenants and additional customers to help fill the spaces. Our integrated value chain can provide a range of services from raising finance, to providing construction services, to additional facilities management services to maintain the asset.
Sunbird Asset Finance through Sunbird Developments is planning to have three projects underway by 2017-2018.