Tanzania Towers: Nairobi’s New 22-Storey Landmark – The Global Tofay

Tanzania Towers: Nairobi's New 22-Storey Landmark - The Global Tofay Global Today
  • Tanzania has embarked on a plan to set up a 22-storey building in Kenya’s capital, Nairobi, to house its embassy staff.
  • Tanzania Towers in Nairobi is part of a grand plan to set up embassy buildings in Kigali, Kinshasa, London, New York, and Lusaka cities.
  • Once complete, Tanzania projects to earn about $13.75 million (TZS36 billion) per year from real estate investments in foreign capitals.

Stung by rising costs of paying rent in foreign capitals for hundreds of chancery staff and the pressing need to shore up foreign currency receipts, authorities in Tanzania have embarked on a plan to set up a 22-storey building in Kenya’s capital, Nairobi.

The new building, which is set to add more floor space in Nairobi’s business zone, Upperhill area, is an investment by NSSF as well as Tanzania’s Ministry of Foreign Affairs.

The Tanzania Towers, containing residences and offices, and adding beauty to the Nairobi skyline, will not only earn the government much-needed foreign currency but will also save government rental expenses for the chancery and embassy staff housing, an update by January Makamba, Tanzania’s Minister for Foreign Affairs and East African Cooperation said in part.

Property and rental prices in Nairobi have been on a steady increase in recent years. According to property tracker HassConsult, the first quarter of 2024 experienced a 2.7 percent growth in asking prices across all properties in the period despite high interest rates that have raised financing costs for both developers and buyers.

Nairobi’s property market

Although the growth was slower than the 4.1 percent reported in the fourth quarter of 2023, a positive trajectory indicates the property market retained its resilience, even as banks raised their loan rates above 20 percent after the Central Bank of Kenya (CBK) increased its base lending rate, the firm noted in its first quarter survey.

“The rise in asking prices moderated in the first quarter of the year as credit conditions tightened following the increase in the CBK’s base lending rate to 13 percent, which has had the effect of sweeping liquidity from the market,” said Ms. Sakina Hassanali, Head of Development, Consulting and Research at HassConsult.

On the rental market, prices went up by 0.4 percent in quarter one this year, slowing from 2.5 percent in the three months to December 2023.

According to Minister Makamba, the development of the Tanzania Towers is part of a broad plan to develop the country’s properties in foreign capitals with the first phase targeting Nairobi, Kigali, Kinshasa, London, New York, and Lusaka.

“The government of Tanzania owns about 101 buildings and plots around the world, most of them in prime areas in major capitals (in Lusaka alone, we own 11 buildings and plots),” Minister Makamba added.

Tanzania Towers part of grand plan to earn forex from foreign capitals

Currently, Tanzania is spending about $11.07 million (TZS29 billion) per annum to meet rental costs for embassy offices and embassy staff housing around the world. In the new plan, however, the government will instead earn about $13.75 million (TZS36 billion) per year from these investments in Nairobi, Lusaka, and other targeted capitals where authorities are setting up their buildings.

At the Nairobi launch of Tanzania Towers, which will house the country’s embassy, minister Makamba was joined by his counterpart in Kenya Musalia Mudavadi. Also present was East Africa Community Minister Peninah Malonza, Deogratius John Ndejembi – Minister in the PMO, Members of Parliament, and a leadership team from the NSSF.

“In the new strategy, which the government approved recently, we seek to use professional and world-class real estate entities to develop these assets to earn income for the government and uplift the quality of our embassies and embassy staff housing,” Minister Makamba explained.

“We are delighted that NSSF management, investment committee, and the whole board have found this investment profitable,” he added.

Tanzania’s move to set up an iconic building in Kenya comes at a time when a survey shows a trend in the surge in demand for Environmental Social and Governance-compliant offices driven by multinational corporations.

Tanzania’s move to set up an iconic building in Kenya marks a significant step in cross-border investments within East Africa. Lately, there is a growing trend among multinational corporations seeking Environmental, Social, and Governance (ESG)-compliant offices, reflecting a broader shift in corporate priorities towards sustainability and ethical operations.

Read also: Africa to benefit as global investors increase ESG investments in 2024

The evolving landscape of Nairobi’s office space segment

As this demand surges, key insights from the Q3 Knight Frank Africa Offices Market Dashboard report shed light on the evolving landscape of office space in Nairobi, highlighting both opportunities and challenges.

Throughout the latter half of 2023, monthly prime office rents in Nairobi have plateaued at $13 per square metre. This stagnation is primarily due to an enduring oversupply of office spaces coupled with a challenging macroeconomic environment.

The persistent economic hurdles have prompted many organizations to deprioritize new office space acquisitions, focusing instead on operational efficiency and cost management initiatives.

Consequently, the average occupancy rates have dipped from 75 percent in the same period in 2022 to 72 percent, underscoring the impact of economic pressures on the real estate market.

In response to these economic challenges, Nairobi has seen a significant rise in the adoption of co-working spaces, driven by the need for cost-efficient workspace solutions, particularly in an economy grappling with a nearly 24 percent depreciation of the local currency against the US dollar in 2023.

Co-working arrangements offer a practical solution by distributing office space costs among multiple occupants, thereby lowering overhead expenses. This collaborative approach not only supports businesses in managing costs but also fosters a dynamic and flexible work environment.

Parallel to the trend toward co-working spaces is the heightened demand for ESG-compliant offices, a preference prominently exhibited by multinational corporations. These organizations are increasingly prioritizing sustainability and ethical standards in their operations, leading to a growing need for office spaces to adhere to ESG principles.

At the moment, Nairobi’s Westlands area has emerged as the preferred location for such offices, with an abundant supply of Grade A office spaces making it an attractive hub for businesses seeking environments that align with their ESG commitments.

#Tanzania #Towers #Nairobis #22Storey #Landmark

Leave a Reply

Your email address will not be published. Required fields are marked *