Kenyan logistics sector on a roll

There is a 15% year-on-year increase in the supply of warehousing in the Kenyan capital Nairobi, according to Broll Property Intel’s Kenya Logistics Snapshot Report. The report shows that logistics occupancy levels registered a year-on-year increase of 4% in Q4 2018. It found that Nairobi had 1.2 million square metres of warehousing in the last quarter of 2018 – 15% up on the 1.1 million square metres in the fourth quarter of 2017. Transport and

logistics users occupy the highest market share of approximately 26%, followed by manufacturing/ engineering and wholesale, at 23% and 22% respectively. The demand from these users is mainly driven by improved infrastructure, government support with regard to tax incentives and special economic zone (SEZ) status, expanding retail platforms, and Mombasa port’s throughput growth. “With GDP growth picking up from around 5% in 2017 and projected to come in around 5.9% for 2018, the

country has experienced increased investor confidence and foreign direct investment inflows,” says Elaine Wilson, Director of Broll Property Intel. “The country’s logistics market is largely driven by manufacturing, transport and storage, as well as wholesale and retail, while the establishment of SEZs has also facilitated the sector’s expansion,” adds Vivian Ombwayo, Broll Kenya’s head of research and valuations. There are currently two privately owned SEZs in

Kenya – Tatu City, located in Kiambu County, and Africa Economic Zones in Uasin Gishu County. There was a 10% growth in containers handled – from 1.19 million TEU in 2017 to 1.31 million TEU in 2018. This growth was driven by the performance of the rail line from Nairobi to Mombasa, which commenced commercial freight operations in January 2018. The next phase of the rail expansion, connecting Nairobi to Nakuru – Kenya’s fourth largest city – is

anticipated to be completed by the first half of 2019, the report notes. Ombwayo says: “Continued growth in Kenya’s logistics sector is envisioned for the foreseeable future. “The expansion of A-grade warehousing is anticipated to grow as the confidence of regional and international operators increase, due to improved business conditions such as tax rebates offered in SEZs and increased port throughput expected from the completion of the Nairobi-Nakuru SGR in mid2019.”