SA firm expands to Nairobi with eye on construction billions

A block of villas at Greenpark estate
A block of villas at Greenpark estate in Athi River. Kenya is enjoying a real estate boom. PHOTO/COURTESY
Distribution & Warehousing Network Limited (DAWN), a South African company that manufacturers construction products, is expanding to Kenya in a bid to tap into the country’s lucrative building and construction sector.

The company that is listed on the Johannesburg Stock Exchange said it would set up shop in Nairobi in January 2014 to distribute its branded hardware, plumbing, kitchen, sanitary ware, engineering and civil products.

DAWN chief executive Pieter van Niekerk said: “We have interests in Tanzania and we have successfully exported to Kenya from South Africa during the past years. We want to have a presence and inventory in Kenya to improve our market offering.”

DAWN said it would spend US$ 1 million to set up a fully-fledged centre in Nairobi and to hire 12 employees. The firm joins compatriots Sanlam and Stanlib, which have announced plans to invest as much as Sh10 billion in the Kenyan real estate sector.

Stanlib, a subsidiary of South Africa Liberty Group, recently said it was planning to invest Sh5.2 billion in construction of a maximum of two shopping malls in Nairobi within the next two years.

The projects will be financed through the US$150 million Stanlib African Direct Property Development Fund that was launched in May.

“It is still early and we have signed non-disclosure agreements so we cannot discuss where exactly they will be but we can say Nairobi and the greater Nairobi region,” said Ferreira, the fund’s manager.

South African firm Sanlam announced in June that it would invest Sh5.5 billion in the Kenyan real estate sector through the US$1 billion Sanlam Africa Core Real Estate Fund that was launched in May on the Mauritius Stock Exchange.

The Kenyan construction industry is expected to see tremendous growth as a result of increased population and government spending on major infrastructure projects around the country.

The residential construction sector is expected to grow as both the government and private developers try to keep up with the rising demand for housing – occasioned by the rise in population.

The value of approved home plans in Nairobi increased by 115 per cent in the first half of this year, according to a report issued recently by the Kenya National Bureau of Statistics (KNBS).

READ: Nairobi home construction doubles in H1 2013

KNBS data indicated that residential building plans approved during the period increased to Sh51 billion compared to Sh23.7 billion in the first half of 2012, due to increased demand for housing.

Extensive opportunities exist in the construction of middle and low income housing, manufacture and supply of building materials, renovation and rehabilitation of transport infrastructure.

The non residential construction is expected to grow in the next decade since the demand for commercial complexes and shopping malls will continue to escalate, thanks to Kenya’s burgeoning middle class.

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