These are obstacles slowing down Kenyans GDP

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If Kenya’s GDP growth is going to be fully realised, there are some major obstacles that need to be overcome and quite quickly.

One of the most pressing is the health of Nairobi’s commercial real estate, which is in danger of becoming a drag on growth unless more, better quality, office and executive living accommodation are developed and brought on stream.

We also need to mention the current state of the local debt market as a related factor. Non-performing loans in the sector rose by 15.8 per cent between April and June last year to Sh44.4 billion compared to the previous quarter.

Property developers recorded the highest growth in loan defaults compared to other sectors and this will further restrict the evolution of the development market.

The fact of the matter is that much of Nairobi’s office stock was developed before 2010 and therefore conforms to older, less demanding, industry standards.

We estimate that as much as 40 per cent of the city’s office accommodation comes with inefficient floor plate designs (less than 80 per cent gross to net efficiencies).

What this means in practice is that people are condemned to working in offices that are inefficient, unattractive and often poorly maintained.

To make matters worse, far too few of these below-par office developments have sufficient parking spaces that meet the needs of their increasingly affluent and aspirational workforces.

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Globally, progressive city planners have realised that modern real estate not only accommodates innovation it actively fosters and encourages it.  Nairobi’s solution is to develop more Grade A office space, which accounts for around only 15 per cent (400,000 m²) of the total available office market.

Equally importantly, Grade A developments need to be developed in new locations throughout the City and not focused on the already congested districts.

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