Pan Africa Insurance plans 20-storey Westlands office block

　

Pan Africa Insurance is set to invest Sh2.5 billion in a new office complex that could be one of the tallest towers along Waiyaki Way.

The building, whose construction starts later this year, will have between 17 and 20 floors housing the insurer’s headquarters in addition to generating rental income.

"We will use a third of the space and rent out the rest," said Pan Africa’s CEO Tom Gitogo in an interview.

The CEO said construction will be funded using Pan Africa’s cash reserves.

Pan Africa already owns properties in Runda Estate under the Mae Properties subsidiary, whose sale has boosted its earnings in the past two years.

Cash-rich insurers have lately expanded their real estate portfolio that is seen as providing high stable returns while also helping to diversify from equities and fixed income investments.

Property developers have earned double-digit returns in the past decade, riding on increased demand for both residential and commercial units from the middle class and businesses.

This has seen more investors, including insurers and pension firms, build more high-end commercial properties such as malls and offices to gain from high rental fees and capital appreciation.

Developers of the modern commercial buildings have preferred to rent out space to large businesses including multinationals and homegrown blue-chip firms. Britam and UAP are other insurers that are building office towers in Nairobi.

UAP is setting up a 22-storey tower in Upper Hill that will have an estimated 227,111 square feet of space for rent.

READ: UAP hires engineers to hasten building of 31-storey tower

The building will serve as UAP’s headquarters, with extra space for letting out. The project is estimated to cost at least Sh3 billion.

Britam is also constructing a 30-storey building, dubbed Britam Tower, in Upper Hill, that will house its headquarters and accommodate other tenants.
The building will have have 30,000 square metres of space for letting and is projected to be completed next year.

Upper Hill and Westlands are emerging as the favourite office locations as more companies shift operations from the congested central business district that is straining facilities such as parking.

The Westlands building will see Pan Africa relocate from its Kenyatta Avenue address and earn premium rent from corporate tenants.

Prime office space in Westlands costs between Sh100 to Sh120 per square foot, compared to between Sh50 and Sh60 in the CBD and Sh90 to Sh100 in Upper Hill.

Pan Africa says it earned high returns from sale of plots in Runda last year, which boosted its earnings in the year ended December.




Source Business Daily