Mixed developments yield more than single-use properties

Investment advisers at Cytonn Real Estate say mixed-use developments in Nairobi are more profitable due to their one-stop shop facilities compared to single-use market investments.

In its latest NMA Mixed Use Developments Report 2019, they say giving tenants more services within a single property makes the investments more attractive compared to single-use properties where one has to leave the premises to seek services from numerous locations across town.

“Mixed-Use Developments (MUDs) recorded average rental yields of 7.3 percent in 2019, being 0.4 percent points higher than the respective single-use retail, commercial office and residential themes average of 6.9 percent, attributed to increasing popularity of the mixed-use concept.

MUDs are convenient as they incorporate working, shopping and living spaces. Such investments attract the highest returns within Kilimani and Limuru Road where rental yields are 9.1 percent and 8.5 percent, respectively above the market average of 7.3 percent.”

The report added that real-estate investors should also incorporate differentiated concepts such as serviced apartments and shared offices that have emerged as new investments that provide attractive returns of 6.4 percent and 13.5 percent respectively.

MUDs offer users secure spaces for homes, shopping as well as working spaces which help beat turnaround times solely blamed on delays caused by Nairobi’s chaotic traffic, it observed.

Largely affluent Kenyan families and expatriates have created a niche market for MUDs that provide round-the-clock security allowing late night shopping, partying and flexible working hours.

Two Rivers, Ciata, Garden City, Westgate, Junction and Sarit Central are among notable MUDs that offer visitors access to numerous facilities from banks, chemists, groceries, eateries, retail shops as well as medical centres among others.

Nairobi is also experiencing a new phenomenon with multinational firms preferring to hire readily furnished offices with various branches across Nairobi that enable workers to work from different locations.