22 January 2014

Kenya: Garden City Project Gets Sh2.7 Billion From IFC

The International Finance Corporation and UK government-backed CDC Group have injected $32 million (Sh2.75 billion) into the Garden City real estate development.

The $250 million (Sh21.5 billion) development being put up by private equity firm Actis integrates retail, residential and office space on a 32-acre parcel of land on Thika Road in the outskirts of Nairobi.

It is touted to host the largest shopping mall in East Africa of 50,000 square metres and will be built in two phases. It comprises 420 units of apartments and townhouses, 20,000 square metres of office space and a 3-acre park.

"The project will meet retail needs in one of the fastest growing areas of Nairobi. An estimated 1.5 million people live within the immediate, primarily residential, catchment area," the IFC said in a statement.

The first phase will see construction of 33,000 square metres of retail space and 76 two- and three-bedroom apartment units by end of this year. The second phase will be completed in 2017.

Garden City has already attracted the attention of major tenants such Nakumatt and Tile & Carpet, "with possibility of housing Game, a South African chain store", according to the developer.

"Few investors have an appetite for greenfield real estate projects in sub-Saharan Africa, so this investment sends a strong signal of our commitment to Kenya's development and our confidence in its economic potential," said Dolika Banda, CDC's regional director.

IFC's board of directors approved an indicative investment of $45.2 million in the project last July, including equity ($8.2 million) and a senior debt ($37 million). The project company's ownership structure comprises Actis Real Estate Fund 2 which has a 53 per cent stake, IFC (12 per cent) and CDC Group (35 per cent).

"The Project will provide a modern and innovative shopping centre expected to be the reference in Kenya and East Africa and also attract reputable international retailers to Kenya," reads a summary review of the project on IFC's website.

It is anticipated that Garden City will stimulate two key sectors of the economy - retail and property - with multiplier effects on other segments of the economy such as transport, food processing and banking/mortgage finance.

Project management in construction of Garden City is being undertaken by Mentor Management in which Actis has a controlling stake.

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