The demand has been spurred by a positive demographic dividend, a growing middle class, the rebound in the tourism sector, and local retailers such as Tuskys and Naivas that are keen on expanding their national footprint.
Nakumatt, which was predominantly the main retailer in a majority of the malls in Mombasa has paved the way for entry of other local retail giants such as Naivas, Chanadarana's Foodplus as well as international retailers such as Shoprite, through its exit from the market.
Moreover, several international retailers have announced plans to expand to Mombasa including LC Waikiki, Domino’s Pizza, Coldstone, and Shoprite. Mombasa has the second largest mall space supply in Kenya with 1.4mn SQFT, after Nairobi, which has 6.5 mn SQFT.
New malls in the region include the Mwembe Mall in Mwembe Tayari measuring 135,600 SQFT, which was completed by November 2018, and the Airport Mall in Changamwe measuring 172,000 SQFT, which is under construction and expected to be operational by the mid 2019.
In 2016, the market recorded average occupancy rates of 82.0%, with average rental yields of 8.9%. In 2018, the occupancy rates came in at 96.3% on average, with rental yields of 8.3%.
For investors, the opportunity is in retail sector as it is under supplied:
Malls in Mombasa are more concentrated in one area, i.e. Nyali and its close environs. Thus, the opportunity is in select residential areas that have no mall space such as Tudor, Changamwe and Likoni Shelly Beach Road area. On account of
(i) Increasing middle class
(ii) lack of supply to serve the upcoming middle-class residential estates
(iii) Increasing residential population..