Investors are shying away from putting their money into the construction of malls in the country owing to a number of factors including recent trends in the retail market.
According to the 2023 Kenya Market Update covering January to June by real estate company Knight Frank, it was noted that investors preferred to renovate old malls - a trend that was gaining popularity in the retail market.
On the other hand, retail outlets such as supermarkets were opting to open up smaller retail shops in various estates and parts of the country rather than having their shops in one big mall.
It was detailed that the decision to have the outlets next to the people was informed by the decision to adequately provide services to people who now prefer to go to the closest shopping outlets.
In some areas, the increased supply of shopping centres led to an oversupply.
Overall, the latest trends were attributed to the state of the economy which has been on the decline after the global pandemic in 2020.
"Today, non-established retail big box malls are a less attractive asset class to investors than they once were. This is due to various factors that led to the poor performance of new entrants," read the report in part.
"This included unfavourable economic conditions precipitated by the pandemic that led to the reduced purchasing power of consumers coupled with the renovation trend of established malls thereby increasing their competitive advantage."
With this new trend, various retail shops were adopting various strategies to meet their targets including offering online services for the customers.
On the other hand, diversification of products and services is being undertaken by various outlets to meet the demands of the customers.
However, despite the increasing trend to move away from big shopping malls, there was still notable investment in the country.
For instance, Business Bay Square, in Eastleigh was noted as the latest development to be implemented in the country. The mall is the biggest in the country.
