2017 Summer Internships: Archie Preissman, Real Estate In the Silicon Savannah – Part 1
By Archie Preissman
As a former United States Army Ranger, I was looking for not only real estate development experience, but also an adventure during my 2017 summer internship. I thought “Why not use the summer internship experience to further myself as a person, not just a future real estate developer?” So, I started looking for a summer associate role in developing nations that had a booming real estate market. One market that kept coming up was Nairobi, Kenya: The Silicon Savannah.
Nairobi is currently in the middle of a giant real estate boom. JLL ranked the city as the 8th most dynamic real estate market in the world. Currently there are four major projects going on in the city of Nairobi proper and dozens of major projects outside the city center: Britam Towers, a 660 foot, 32 floor office building is almost completed, Two Rivers Mall was just built and is the largest mall in East Africa, The Montave, a mixed complex with a hotel, apartments, and offices is in pre-development, and the largest project, The Pinnacle Towers, a two-tower 70 story mixed use complex that when completed will be the tallest building in Africa, just broke ground. These projects are proof that Nairobi is not only the business hub of East Africa but becoming the business hub for the whole of Africa.
Companies like Coca-Cola, Google, IBM, Cisco, and GE have all moved their African headquarters to Nairobi. International investments in Nairobi real estate accounted for at least 40% of the annual total in 2016. This influx of international companies, a reasonably stable government, a developed banking system, and one of the best-educated populations in Africa, have all lead residents of East Africa to invest their life savings in property in Nairobi.
These factors all pointed me in the direction of Nairobi. Real estate returns in Nairobi are incredible to say the least. Granted, ten-year treasury bills in Kenya have a 10% return rate, so the returns in an even remotely risky development project here typically net the investors around 25% a year. This answers the question brought up in Wally Boudry’s real estate finance class about what hurdles look like in a time of high interest rates. This booming real estate market has been hot for the past 8 years and is seemingly on a nonstop tear with no end in sight. This is why I came to Cytonn Investments here in Nairobi for the summer of 2017.
(Stay tuned for Part 2 coming next week)