News Column

Fusion Revises Space Prices Up for Upper Hill Office Building

August 13, 2014

James Waithaka



Fusion Group and its joint venture partners have revised prices of space in a building under construction in Upper Hill's Community area owing to "favourable market conditions".

The Nairobi-based hybrid business financing and private equity firm is developing a 24-storey office tower on 4th Ngong Avenue, off Ngong Road, in a joint venture with Joseph Mburu, the original owner of the land.

The development, christened Project Snowdrop, is a Grade-A commercial space and includes parking space for sale. Construction has reached the 13th floor level, according to Fusion Investment Management.

"Due to favourable market conditions, the price per square foot and for the parking have been revised upwards. The pre-sales are ongoing as anticipated and the sales agents are in discussion with two prospective major buyers. We are very pleased to report that the project is on track," the firm says in an update on the project.

Fusion however did not disclose the initial offer prices nor the revised prices for office and parking spaces. Sale and rental prices for office space in Upper Hill range between Sh110 per square feet and Sh200 per square feet, excluding an average service charge of Sh20 per square feet.

The development will create 145,132 square feet of office space and 297 car-park slots for sale. It says there is "a strong market for property of this type" to support Nairobi's position as a regional business hub.

It says the under-supply of quality office space in Upper Hill heralds "healthy returns" on investments for shareholders. Fusion raised $10 million (Sh879.5 million) for the development in April 2013.

"We plan to seek out similar opportunities in the future, as part of our planned expansion into real estate investments of this scale," it states.

Mburu and Fusion Group - which finances single real estate projects across the East Africa at $3-20 million (Sh263.85 million to Sh1.76 billion) - formed a special purpose vehicle named Upward Scale Investments to execute Project Snowdrop.

"His business case was solid, in terms of projected returns, but required major investment from multiple shareholders to be viable," the firm states, adding that it "made a major investment" into the project.

Fusion Group has presence in Nairobi, Kigali, Kampala and Dar es Salaam. Its real estate investments are through SPVs with a controlling interest.

Besides Project Snowdrop, it is also developing Project Panorama, another Grade-A commercial office development next to the Embassy of Japan on Mara Road, Upper Hill, and near the British High Commission.

The latter is 30 per cent complete, according to the firm, with construction now at mezzanine floor level. Fusion Group raised $14.7 million (Sh1.29 billion) for the project.

"The project lost some time during the excavation of the hard rock for the foundation sub-structure... however, the project team are to recover the lost time over the coming months."

It is also putting up Project Creekside, a 90-unit luxury apartment development in Mtwapa, Mombasa. Construction begun last December, with the show-house expected to be ready for viewing next month.


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Source: AllAfrica


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