Forget the pessimists worried about electoral ‘noise’ – investors remain bullish on Kenya.
Gateway Real Estate Africa (GREA) has completed more than $100m worth of projects in the country. “There’s such buoyancy in Kenya at the moment,” Pearson says. The ease of connection with East Africa is creating “a huge positive push. There’s a lot going for Kenya right now”.
This month, the company moved its regional headquarters for East Africa from Mauritius to Tatu City, on the outskirts of Nairobi.
The 5,000-acre project is Kenya’s first Special Economic Zone (SEZ) and seeks to attract businesses with tax concessions. Businesses in the zone pay a 10% corporate tax rate for 10 years, and 15% for the following 10 years, versus a standard corporate tax rate of 30%. There are also VAT and import duty exemptions. About 70 businesses are operational or under development in the zone.
The SEZ is particularly suited to financial services, fast-moving consumer goods, as well as light and heavy industrial projects, Pearson says. The new city has a solar power supply supplementing the national grid and its own water system, which Pearson says is “as good as any in Africa”.
Tatu City is owned and developed by Rendeavour, Africa’s largest new city builder. In May, CCI Global, Africa’s largest international contact centre operator, said it will move to a purpose-built office in Tatu, with the creation of 4,000 jobs. Completion of the GREA-developed facility is scheduled for the fourth quarter of 2023. GREA and Rendeavour have a strategic partnership that includes commercial, warehousing and logistics developments at new cities in East and West Africa.
The Democratic Republic of the Congo (DRC)’s membership of the East African Community (EAC) since April underpins Tatu’s future prospects, Pearson says.
- “The foresight of Rendeavour has opened the connection to the DRC.”
- GREA may be willing to consider projects in the DRC, which would use project finance and be off the balance sheet, he adds.
African pipeline
GREA operates in 14 African countries, including Ethiopia, Uganda, Nigeria and Morocco. About 96% of income is in US dollars, with 15 clients making up about 80% of income. The company has an African development pipeline worth $600m and Pearson says he’s “very positive” on the outlook.
Four planned Kenyan projects account for about $200m of the pipeline, and two hospitals in Mauritius are also under construction. “Africa is still very much in a growth phase,” he says.
Pearson is also the co-founder of Grit Real Estate Income Group, which trades on the London Stock Exchange and in Mauritius. In April, Grit raised its stake in GREA from 19.98% to 26.29%, and has said it will lift the holding to 35% by the end of July. Grit has the option to raise its stake to 48.62% by 15 December.
In April, Grit – led by CEO Bronwyn Knight – also bought a controlling stake of 78% in GREA’s asset manager, Africa Property Development Managers.
The bottom line
Tatu City will appear a more far-sighted investment if the DRC’s membership at the EAC proves a success.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.
View subscription options
