Kenya to build Africa's tallest building
Could Nairobi, Kenya’s traffic-clogged capital, be the next Dubai? Two large Dubai-based investors, Hass Petroleum and White Lotus, seem to think so. On May 23rd they formally started construction of what they claim will be Africa’s tallest building. Out of a vast hole in the ground in Upper Hill, a neighbourhood full of government offices, will rise two towers, the taller some 300 metres high and named “The Pinnacle”. (For comparison, the Burj Khalifa in Dubai, the world’s tallest building, is 828 metres high). One will contain a hotel; the other, some 150 swanky apartments (or “residences”). A helipad will jut out of the roof of the taller tower, allowing the truly plutocratic to be whisked in over the traffic jams from the airport.
The investment is a fillip for Kenya. Much of Africa is in economic trouble. In 2016, according to the IMF, annual GDP growth across the continent sank to just 1.4%, the lowest rate in 20 years. Yet Kenya, which depends less on oil and mining than most African countries, has kept growing. Its economy probably expanded by 6% in 2016. Much of that came from projects such as the Pinnacle, a $220m investment. Nairobi’s skyline is dotted with cranes; new suburban housing estates are flourishing at the edge of the city. However, not everyone is confident that it can last.For most of the past decade, investing in property in Nairobi has been extraordinarily lucrative. “Ten years ago, anything, honestly anything, would sell out,” says Sakina Hassanali of Hass Consult, a property agency unconnected to Hass Petroleum. House prices have more than doubled since then, despite a flood of new apartment blocks and housing estates. As well as foreign investors, the boom has been underpinned by investment from wealthy Kenyans. Faced with an illiquid stock exchange and precarious banks, they have preferred to put their money into property. Scammers have got in on the frenzy, selling land they do not own, or off-plan apartments which are then built shoddily or not at all.
Yet the property boom is now slowing. “Prime” residential rents fell by 6% in 2016, according to Knight Frank, another property firm. In some corners of Nairobi half-built houses have sat for months with no progress. It is not clear that there are enough Kenyans who can afford to rent them. Most forecasters expect economic growth to slow, because of uncertainty about the Kenyan general election in August. Investment in infrastructure has helped to fuel the economy, but this could tail off after the election.
Could the construction of Africa’s tallest building turn out to be the last dance of the party? When asked who will live in his firm’s new “residences”, Abdinasir Hassan, the chairman of Hass Petroleum, points to “the large number of expatriates” working for NGOs in Nairobi. He also thinks that Nairobi will become a new financial hub for Africa. Yet few NGO workers are lavishly paid—and none is likely to need a helipad.
The Economist online, May 27th, 2017