i AN INVESTIGATION INTO THE IMPACT OF INCREASED AN INVESTIGATION INTO THE IMPACT OF INCREASED AN INVESTIGATION INTO THE IMPACT OF INCREASED AN INVESTIGATION INTO THE IMPACT OF INCREASED DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN RESIDENTIAL REAL ESTATE MARKET RESIDENTIAL REAL ESTATE MARKET RESIDENTIAL REAL ESTATE MARKET RESIDENTIAL REAL ESTATE MARKET (CASE STUDY: THE JUNCTION SHOPPING MALL) (CASE STUDY: THE JUNCTION SHOPPING MALL) (CASE STUDY: THE JUNCTION SHOPPING MALL) (CASE STUDY: THE JUNCTION SHOPPING MALL) BY BY BY BY MUANGE JUDITH MUANGE JUDITH MUANGE JUDITH MUANGE JUDITH NZILANI NZILANI NZILANI NZILANI B135/25388/2013 B135/25388/2013 B135/25388/2013 B135/25388/2013 A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY AND PROPERTY MANAGEMENT AND PROPERTY MANAGEMENT AND PROPERTY MANAGEMENT AND PROPERTY MANAGEMENT DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT SCHOOL OF BUILT ENVIRONMENT SCHOOL OF BUILT ENVIRONMENT SCHOOL OF BUILT ENVIRONMENT SCHOOL OF BUILT ENVIRONMENT COLLE COLLE COLLE COLLEGE OF ARCHITECTURE AND ENGINEERING GE OF ARCHITECTURE AND ENGINEERING GE OF ARCHITECTURE AND ENGINEERING GE OF ARCHITECTURE AND ENGINEERING UNIVERSITY OF NAIROBI UNIVERSITY OF NAIROBI UNIVERSITY OF NAIROBI UNIVERSITY OF NAIROBI MAY 2014 MAY 2014 MAY 2014 MAY 2014
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AN INVESTIGATION INTO THE IMPACT OF INCREASED AN INVESTIGATION INTO THE IMPACT OF INCREASED AN INVESTIGATION INTO THE IMPACT OF INCREASED AN INVESTIGATION INTO THE IMPACT OF INCREASED
DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN DEVELOPMENT OF SHOPPING MALLS ON THE KENYAN
RESIDENTIAL REAL ESTATE MARKETRESIDENTIAL REAL ESTATE MARKETRESIDENTIAL REAL ESTATE MARKETRESIDENTIAL REAL ESTATE MARKET
(CASE STUDY: THE JUNCTION SHOPPING MALL)(CASE STUDY: THE JUNCTION SHOPPING MALL)(CASE STUDY: THE JUNCTION SHOPPING MALL)(CASE STUDY: THE JUNCTION SHOPPING MALL)
A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY REQUIREMENTS FOR THE AWARD OF DIPLOMA IN REAL ESTATE AGENCY
AND PROPERTY MANAGEMENTAND PROPERTY MANAGEMENTAND PROPERTY MANAGEMENTAND PROPERTY MANAGEMENT DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENTDEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENTDEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENTDEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT
SCHOOL OF BUILT ENVIRONMENTSCHOOL OF BUILT ENVIRONMENTSCHOOL OF BUILT ENVIRONMENTSCHOOL OF BUILT ENVIRONMENT COLLECOLLECOLLECOLLEGE OF ARCHITECTURE AND ENGINEERINGGE OF ARCHITECTURE AND ENGINEERINGGE OF ARCHITECTURE AND ENGINEERINGGE OF ARCHITECTURE AND ENGINEERING
UNIVERSITY OF NAIROBIUNIVERSITY OF NAIROBIUNIVERSITY OF NAIROBIUNIVERSITY OF NAIROBI
MAY 2014MAY 2014MAY 2014MAY 2014
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TABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTS TABLE OF CONTENTS .......................................................................................................................... II DECLARATION ..................................................................................................................................... VI DEDICATION ....................................................................................................................................... VII ACKNOWLEDGMENT ........................................................................................................................ VIII LIST OF FIGURES ................................................................................................................................ IX LIST OF TABLES .................................................................................................................................. IX LIST OF CHARTS ................................................................................................................................. IX LIST OF GRAPHS ................................................................................................................................ IX ABBREVIATIONS AND ACRONYMS .................................................................................................... X APPENDIX ............................................................................................................................................ XI ABSTRACT .......................................................................................................................................... XII CHAPTER ONECHAPTER ONECHAPTER ONECHAPTER ONE ...................................................................................................................................... 1 1.0 INTRODUCTION .......................................................................................................................... 1 1.1 PROBLEM STATEMENT ............................................................................................................... 4 1.3 OBJECTIVE OF THE STUDY ......................................................................................................... 7 1.4 HYPOTHESIS ............................................................................................................................. 8 1.5 RESEARCH METHODOLOGY ........................................................................................................ 8 1.5.1 Data collection ................................................................................................................. 8 1. 5.2 Data analysis ................................................................................................................... 8 1.5.3 Data presentation ............................................................................................................ 9 1.6 SIGNIFICANCE OF STUDY ........................................................................................................... 9 1.7 JUSTIFICATION OF STUDY ........................................................................................................... 9 1.8 STUDY ASSUMPTION ................................................................................................................ 10 1.9 SCOPE OF STUDY .................................................................................................................... 10 1.9.1 Conceptual scope.......................................................................................................... 10
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1.9.2 Physical scope/study area ............................................................................................ 10 1.10 DEFINITION OF TERMS .......................................................................................................... 11 1.11 ORGANIZATION OF THE STUDY .............................................................................................. 12 CHAPTER TWO: LITERATCHAPTER TWO: LITERATCHAPTER TWO: LITERATCHAPTER TWO: LITERATURE REVIEWURE REVIEWURE REVIEWURE REVIEW ............................................................................................ 13 2.0 INTRODUCTION ........................................................................................................................ 13 2.1 RESIDENTIAL PROPERTY MARKET IN KENYA ............................................................................. 13 2.2 FACTORS AFFECTING RESIDENTIAL PROPERTY PRICES IN KENYA .............................................. 14 2.2.1 The effect of new road construction on the property prices .......................................... 15 2.2.2 Property Prices and Interest Rates ............................................................................... 15 2.3 THE EVOLUTION OF SHOPPING CENTRES. .................................................................................. 16 2.4 TYPES OF SHOPPING CENTRES ................................................................................................ 23 2.4.1 Introduction .................................................................................................................... 23 2.4.2 Neighbourhood Centre ................................................................................................. 23 2.4.3 Community Centre ........................................................................................................ 24 2.4.4 Regional Centre ............................................................................................................ 24 2.4.5 Super regional Centre ................................................................................................... 24 2.4.6 Fashion/Specialty Centre .............................................................................................. 25 2.4.7 Power Centre ................................................................................................................. 25 2.4.8 Theme/Festival Center .................................................................................................. 25 2.4.9 Outlet Centre ................................................................................................................. 26 2.5 SHOPPING CENTRE DEVELOPMENT THEORIES ........................................................................... 27 2.5.1 Central Place Theory ........................................................................................................... 27 2.5.2 Congener Conglomeration Theory ...................................................................................... 28 2.5.3 The Bid Rent Theory ........................................................................................................... 29 2.6 IMPORTANCE OF SHOPPING CENTRE DEVELOPMENT ................................................................. 30 2.6.1 Economic perspective ......................................................................................................... 31 2.6.2 Social perspective ............................................................................................................... 32
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2.6.3 Urbanism perspective .......................................................................................................... 33 2.6.4 Environmental perspective .................................................................................................. 34 2.7 CASE STUDIES ANALYZING THE IMPACT OF SHOPPING MALL ON THE SURROUNDING RESIDENTIAL PROPERTY VALUES AND SUPPLY ........................................................................................................... 36 2.7.1 Introduction .......................................................................................................................... 36 2.7.2 Case study of Bugis Junction and Suntec City in Singapore .............................................. 36 2.7.3 The effect of Kasuwan Laushi Super Market on Surrounding Residential Accommodations in Bauchi Metropolis, Nigeria ........................................................................................................ 37 2.7.4 Case of Wal-mart and its effects on residential property values ......................................... 38 2.8 FACTORS LEADING TO INCREASED DEVELOPMENT OF SHOPPING MALLS IN NAIROBI ..................... 39 2.8.1 Introduction .................................................................................................................... 39 2.8.2 Economic Growth ................................................................................................................ 40 2.8.3 Growth of the middle class in Kenya ................................................................................... 41 2.8.4 Increased Urbanization in Kenya ........................................................................................ 42 2.8.5 Improved transport network ................................................................................................. 44 2.8.6 Foreign Investment .............................................................................................................. 45 CHAPTER THREE: RESEACHAPTER THREE: RESEACHAPTER THREE: RESEACHAPTER THREE: RESEARCH METHODOLOGYRCH METHODOLOGYRCH METHODOLOGYRCH METHODOLOGY ............................................................................ 47 3.0 INTRODUCTION ........................................................................................................................ 47 3.1 RESEARCH DESIGN .................................................................................................................. 47 3.2 POPULATION ........................................................................................................................... 47 3.3 SAMPLE AND SAMPLING TECHNIQUE .......................................................................................... 47 3.4 RELIABILITY AND VALIDITY OF DATA INSTRUMENTS ..................................................................... 48 3.5 INSTRUMENTATION .................................................................................................................. 49 3.6 DATA ANALYSIS ....................................................................................................................... 49
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CHAPTER FOUR: DATA CHAPTER FOUR: DATA CHAPTER FOUR: DATA CHAPTER FOUR: DATA ANALYSIS AND PRESENTANALYSIS AND PRESENTANALYSIS AND PRESENTANALYSIS AND PRESENTATIONATIONATIONATION............................................................. 50 4.0 INTRODUCTION ........................................................................................................................ 50 4.1 THE INCREASE IN SUPPLY OF HIGH END RESIDENTIAL UNITS ........................................................ 50 4.2 THE EFFECT OF THE JUNCTION MALL ON RESIDENTIAL UNITS PRICES .......................................... 54 4.3 RESIDENTS RESPONSE ON THE INCREASED PRICES FOR RESIDENTIAL HOUSING UNITS ................. 56 4.4 RESEARCH OBSERVATIONS. ..................................................................................................... 58 4.4.1 The Plot ratio reduction. ................................................................................................ 58 4.4.2 Increase in the number of storeys. ................................................................................ 58 4.5 HYPOTHESIS TESTING .............................................................................................................. 59 CHAPTER FIVE: CONCLUCHAPTER FIVE: CONCLUCHAPTER FIVE: CONCLUCHAPTER FIVE: CONCLUSIONS AND RECOMMENDASIONS AND RECOMMENDASIONS AND RECOMMENDASIONS AND RECOMMENDATIONSTIONSTIONSTIONS ........................................................ 61 5.0 INTRODUCTION ........................................................................................................................ 61 5.1 CONCLUSIONS ......................................................................................................................... 61 5.2 RECOMMENDATIONS ................................................................................................................ 63 5.3 AREAS OF FURTHER RESEARCH ................................................................................................ 64 BIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHY ................................................................................................................................... 65 APPENDIX1: QUESTIONNAIRE TO REAL ESTATE DEVELOPERS AND PROFESSIONALS IN REAL ESTATE FIRMS.... ......................................................................................................................... 68 APPENDIX 2: QUESTIONNAIRE TO THE RESIDENTS CLOSE TO THE JUNCTION MALL ............ 70 APPENDIX 3: : : : SECTIONS OF THE JUNCTION MALL ........................................................................ 72
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DECLARATIONDECLARATIONDECLARATIONDECLARATION
I, Muange Judith NzilaniMuange Judith NzilaniMuange Judith NzilaniMuange Judith Nzilani hereby declare that this project is my original work and has
not been presented for a degree in any other university.
multifamily housing units that are used, serve, or are designed as a place of
residence
• Real estate or property marketReal estate or property marketReal estate or property marketReal estate or property market: CEM (2006) defined real property market as
the interaction of individuals who exchange real property rights or interests for
other assets such as money. The function of the real estate property market is
to establish a pattern of price so that given sufficient time, land resources are
allocated according to their most profitable (highest and best use) relative to
other land resources.
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1.111.111.111.11 Organization of the studyOrganization of the studyOrganization of the studyOrganization of the study
Chapter 1: Observes the problem statement, objectives of the study, research
hypothesis, research methodology, justification and significance of the study.
Chapter 2: Literature review, discussing the residential property market in Kenya, the
evolution of shopping centres and the different types of shopping centres, case
studies exploring the effect of shopping centres on residential property market and
the factors that have led to increased development of shopping malls.
Chapter 3: Research Methodology.
Chapter 4: Data Findings, analysis and presentation.
Chapter 5: Involves the conclusions from the information obtained after the data
analysis and recommendations mainly derived from the conclusion.
A Shopping Centre/mall can be defined as a group of commercial establishment,
planned, developed, owned and managed as a unit related in location, size and
types of shops to the trade area the unit serves. It provides on-site parking in a
definite relationship to the types and sizes of shops. Shopping malls are becoming
increasingly popular throughout the world leading to increased development of malls.
Therefore it is important to know what factors influence their popularity and what
impact they have the residential property market. This chapter explains the factors
influence the increased development of shopping malls. It also explores relevant
literature on shopping centres and residential property market.
2.12.12.12.1 Residential Property Market in KenyaResidential Property Market in KenyaResidential Property Market in KenyaResidential Property Market in Kenya
Knight Frank (2012) stated in the quarterly report that Nairobi's luxury residential
market is expected to remain among strongest performers in 2012. The first quarter
report however showed prime residential property prices in Kenya's capital, which
remained unchanged between December 2011 and March 2012. The high-end
segment nonetheless recorded double-digit growth in the six months to March at
11.6 per cent. Knight Frank (2012) report stated that the value of prime property in
the world's key cities fell by 0.4 per cent in the first quarter of 2012, the first quarterly
fall of the index since the depths of the global recession. Some luxury buyers took to
the side-lines to observe their market's trajectory. Nairobi prime residential market
topped global cities with double-digit growth over a 12 month period alongside
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Jakarta, Miami and London despite the index's overall sluggish performance. The
Kenyan capital recorded a 24.2 per cent in 12-month change to March. According to
the report the overall index will remain subdued in 2012 fluctuating between marginal
price falls and rises with London, Moscow, Jakarta, Nairobi and Singapore expected
to be strongest performers. Kenya's luxury homes market in Nairobi and the coast
were the best performing prime residential property markets in the world in 2011,
according to The Wealth Report 2012 released by the property services firm and Citi
Private Bank.
Prices in these two locations rose highest in 2011 compared to other global locations
considered safe havens for property investments by high net-worth individuals
(HNWI). Nairobi recorded the strongest growth with a 25 per cent rise in prices for
top-end residential as the coast followed with a 20 per cent price rise, out of 71
locations tracked by Knight Frank's Prime International Residential Index (PIRI).
Knight Frank (2013) in the Africa Report stated that rental values have continued to
climb, partly as a result of a shift away from the mortgage market, resulting in
improving yields across the sector. According to the report with interest rates slowly
falling and a relatively stable economy, a post-election recovery is expected in this
sector in the second quarter of 2013.
2.22.22.22.2 Factors affecting Residential Property Prices in KenyaFactors affecting Residential Property Prices in KenyaFactors affecting Residential Property Prices in KenyaFactors affecting Residential Property Prices in Kenya
Kariuki (2012) the property market in Nairobi has in the last 10 years thrived to an all
time high. In 2010, Nairobi recorded the highest growth in luxury house prices in the
world. A study by Knight Frank found that the prices for real estate jumped by 25% in
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2011. These prices can be explained by the fact Kenya is safer than its neighbours.
It is also attracting investment from international companies and from the diaspora.
According to Kariuki the growth in prices and number of developments can also be
explained by other factors such as discussed below.
2.22.22.22.2.1.1.1.1 The effect of new road construction on the property pricesThe effect of new road construction on the property pricesThe effect of new road construction on the property pricesThe effect of new road construction on the property prices
According to Reader (2011), tttthe effects of road construction on property values is
great. Both in the positive and the negative, road construction can have a large effect
on property values. Kariuki (2012) the two scenarios have been reflected in the
Kenyan market. Where, in 2010 to beginning of 2012 travel time to Kiambu, a town
about 15km outside of Nairobi was two or more hours during the peak period. With
the completion of the Thika Super Highway travel time has been reduced to half an
hour or 45 minutes at the most during peak time and 15 minutes off peak. While
places like Langata which is closer to the CBD and has road construction going on
can take two hours travel time.
The road construction can also have a negative impact on property values. This
effect, according to Casey (2012) was seen on single family residences. The key
factor here is the increasing volume of traffic, leading to environmental pollution. It
has however positive impact on multifamily residential and commercial properties,
where proximity to the road is one of the most important factors.
2222.2.2.2.2....2222 Property Prices and Interest Rates Property Prices and Interest Rates Property Prices and Interest Rates Property Prices and Interest Rates
Kariuki (2012), Interest rates affect an individual’s ability to purchase residential
property. They affect the cost of financing and mortgage rates which in turn affects
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property. These rates also affect returns on substitute investments and price
changes. In the study Kariuki stated that during the 2008 and 2010 global property
meltdown, Kenya was warned that it was facing similar dire straits but these
predictions never scared off investors. However, the Kenyan property market
continued to thrive on low interest rates. In 2011, there were again predictions by
financial analysts that there was a looming property bust in Kenya and therefore the
likelihood of slowdown in the sector. This was because in 2011 and beginning of
2012, interest rates had increased from a low of 14% to more than 24%. This time
most real-estate players were in agreement that the boom time in the sector was
over and hard times beckoned, courtesy of the high interest rates.
2.32.32.32.3 TheTheTheThe eeeevolution of shopping centresvolution of shopping centresvolution of shopping centresvolution of shopping centres....
In the ancient times trading activities took place in meeting and gathering places
(Coleman 2007, p.19). Agora was an open ‘‘place of assembly’’ in ancient Greek
city-states. Mumford (1961) states that the most important function of the agora was
a place for daily communications for formal and informal assembly. In the beginning,
the citizens would gather in the agora for military duty or to hear statements of the
ruling king or council, early in the Greek history in 900’s-700’s B.C. Later, the Agora
defined as an open-air, often tented market place of a city where merchants had
their shops and where craftsmen made and sold their wares (Mark 2009, p.1).
According to Rubenstein (1992, p.2), Agora was the genesis of modern urban space.
Trajan’s Market (MercatusTraiani) is another important milestone in the evolution of
shopping places. During the middle ages, the complex was transformed by adding
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floor levels. Trajan’s Forum is likely to have been one of the first collections of
defined shops and was a magnificent arrangement of shared-use buildings. It was
the first example of the shops largely under cover and arranged on several levels
(Coleman 2007, p.20). Pevsner (1976, p.235) described Trajan’s Forum as having
about 150 shops on various levels. The upper levels were used for offices while the
lower part, had shops selling oil, wines, seafood, groceries, vegetables and fruit.
During Medieval period to 19thCentury, after the fall of the Western Roman Empire in
5thcentury, Western Europe drifted into 500 years or so of dark ages, shopping
included. The large-scale retail environment of the Roman forum was not re-attained
until many centuries later. However, trading never ceased and barter became the
basis for exchange of goods rather than money. Following the dark ages, the Middle
Ages witnessed the first sustained urbanization of northern and western Europe. As
a result, towns began to proper again, alongside the castles and abbeys, eventually
broadening and developing into trading centres (Coleman 2007, p.20).
The market and town halls were the heart of trading and business activity of the city.
They were located along with the market square, in the center of the town. The early
market and town hall buildings combined the two uses; the first floor was
administration, the ground floor remained open between the columns and was used
as an extension to the market. The merchandises displayed on removable stalls.
After a while, the ground floors were arranged into a group of small shops. So, the
defined shop spaces in Northern Europe started. This format of outward facing
collections of shops would come to form the basis of shop-lined streets throughout
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Europe in later centuries (Coleman 2007, p.20-21). Likely Morrison (2004, p.8) states
that, by 1300 permanent structures had began to intrude to on open market places.
These islands of buildings originated as temporary stalls arranged in narrow rows
devoted to particular trades. Later, the stalls were replaced by buildings with
domestic accommodation or storage above a stall or shop, and many were
eventually reconstructed as complete houses. By the 16th century, across Europe
market buildings were no longer combined with town halls. Instead, market halls
were built as large linear structures covering long nave-like spaces, with side aisles
lined with stalls forming collections of shops (Coleman 2007, p.22).
The bazaar first appeared in the Middle East, around the fourth century, along the
important trade routes as a reason of constant flow of foreign and exotic goods.
Special areas of cities were eventually designated as areas of trade for the
establishment of first bazaars. Bazaars were not only for trade, but they were also
the social, religious, and financial centers of cities. An Eastern Bazaar is a
permanent merchandizing area, market place, or street of shops where goods and
services are exchanged or sold. The bazaar is the precursor for the modern day
supermarket, flea market, and shopping mall, which originated from ancient
civilizations. More importantly, it has had a great influence on the economic
development and centralization in modern cities around the world.
An important detail in the evolution of Eastern bazaars, which is different from
European market and town halls is that, the bazaars were generally inward looking
with the shops facing into a covered street or interior space, while the European
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market and town halls generally arranged the shops to face outwards on to the
squares and streets (Coleman 2007, p.25). According to Geist, the Eastern bazaar is
the reference model of the arcade, which has also an inward planning (Geist
1985,p.4). In late 16th century Europe, an exchange a new type of trading building
appeared following the town hall and market place. The exchanges combined
different activities, with open stands selling goods on the first floor and commodity
trading stalls on the ground floor (Coleman 2007, p.25). The first exchanges were
stock exchanges. In the early times of the Royal Exchange of London, the building
was the collection of stalls, which were tended to sell luxury items, in a large
interior space with public thoroughfares passing between the lines of stalls .The
format of selling luxury items under cover in enclosed spaces extending over two
floors influenced the shopping formats of arcades and department stores (Coleman
2007, p.26).
By the 18th century, as a result of rise of bourgeoisie, the shopping streets developed
in Europe (Koolhaas, 2001 p.30). Just before the Industrial Revolution the market
places in cities were no longer spatially sufficient for the evolving trade. As a result,
starting from Italy during the16th century, and in northern Europe in the 17th century,
the central streets of cities were lined with shops, pubs and coffee shops, where the
shops were organized by type into the same street -e.g. Bread Street, Milk Street,
Cordwainer Street in London (Coleman 2007,p.26). The shopping streets are very
important in the evolution of arcades. Also with the later separation of pedestrian and
vehicular traffic the concept of shopping street was made more comfortable and
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safe, and has lead to our present shopping malls and pedestrian malls (Rubenstein
1992, p.14). Arcades are a highlight in the evolution of shopping. It was the first
European building planned primarily to accommodate a collection of shops
(Coleman2007, p.30). Amendola (2006, p.86) states that, arcade is a milestone in
the relationship between shopping and the city because they show that there is a
demand for experience and people are willing to pay for it. Thus they also indicate
that the public life reached its peak in the nineteenth century (Geist1985, p.1).
In the twentieth century, city planners and developers started to design large
enclosed shopping centers. As a result the nineteenth century shopping arcade had
become by 1970 a historic building type. However, it has never completely
disappeared, the corridors of shops have continued to utilize small areas of land
(MacKeith 1986, p.21, p.141). The department stores developed from the magasins
de nouveautes stores in Paris and the bazaar stores of London, originating in the
late-18thcentury (Coleman 2007, p.33). According to Sutcliffe (1993, p.132), between
the 1860 and 1900 it had become normal for department stores to have an open,
metal-framed interior with natural lighting which they shared this characteristic with
exhibition halls. As a result of Industrial Revolution, between late 18thand early
19thcentury, Many technological inventions took place in department stores. The
department stores were first with the elevator and second with escalators, which
were both highlights of vertical movement in public buildings (Coleman 2007,
p.38).Starting from the middle of the 20thcentury, because of the success of the
shopping centre, the department stores became inward looking simple boxes. Many
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of them closed but some of them refreshed and modernized interiorly and continue
to live (Coleman 2007, p.38, p.39). Around this time, from the middle of the
20thcentury while the shopping centers started to establish in the USA. According to
Pevsner (1976, p.271), a further development beyond the department store was the
chain store. Very interestingly, an instructive parallel to the chain store, first in the
USA, then extended to Europe, the chain of hotels started to develop (Pevsner 1976,
p.272). This was another inspiration for the architectural history from the retail
evolution. In the 1930’s, the self-service store concept, which was a precursor to
today's supermarkets was introduced. According to Coleman (2007, p.40), the
growth and success of the supermarkets was facilitated by new road systems, the
industrialization of food processing and packaging, networks and warehouses, and
the development of the refrigerator.
The supermarket concept born in the USA and it spread to Europe later with more
varied formats. The new larger formats developed in England such as ‘super stores’
and ‘hypermarkets’ in Europe. The hypermarkets have been used to anchor regional
shopping centers (Coleman 2007, p.40). Strip malls (also called mini-mall or
shopping plaza and often called a power center if it contains a ‘big box’ store),
defined as a collection of several stores located in the same building that share a
common parking lot, developed from the 1920s. The strip mall is often located at
major intersections in a town or city and easily accessed by car. They differ from the
larger shopping mall by containing fewer stores and are open-area planned where
the stores arranged in a row. The first unified shopping mall, the fore runner to the
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suburban shopping mall, was the Country Club Plaza, founded by the J.C. Nichols
Company in 1922, opened near Kansas City of the USA (Koolhaas 2001, p.34).
By the middle of the 20thcentury in the USA, the population was growing and
urbanites were seeking to escape from the intolerable urban conditions. Luckily, it
was possible to settle down in suburbs by the abundance of available and accessible
land and universal spread of car ownership (Coleman 2007, p.42). Additionally,
Beddington (1991, p.3) states that, the evolution in environmental engineering –
ventilation, air-conditioning systems and advanced lighting systems – facilitated the
development of closed malls. The suburban malls are the beginning of the shopping
centers in modern sense. According to Coleman (2007, p.42), in 1945 there were
only 45 suburban malls across America and in 1958 they grew over to 2900.
At the end of World War II (1945), urban America was still the inner cities and there
were hardly any outer cities; the suburban movement was just starting (Rusk 1995,
p.5). On April 1950, the Northgate Shopping Mall opened at NE Northgate Way at
5thAvenue in Seattle, which was planned by developers Rex Allison and Ben B.
Ehrlichman and designed by John Graham. According to Koolhaas’ (2001, p.34)
evolution of retail types, it was the first open-air mall. Northgate shopping mall
established the principle of shops being arranged either side of a long linear
pedestrian walkway and it became the model for the other suburban malls.
Eventually, the suburban malls influenced the form of many successful regional and
super-regional shopping malls throughout the world. The two types of mall plans, the
dumbbell and the cluster, were established in the early 1950s with the suburban
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malls. Today, most of the contemporary malls’ plan share characteristics of both
types (Herman 2001, p.462).
2.42.42.42.4 Types of Shopping CTypes of Shopping CTypes of Shopping CTypes of Shopping Centresentresentresentres
2.62.62.62.6 Importance of Shopping CImportance of Shopping CImportance of Shopping CImportance of Shopping Centre entre entre entre DDDDevelopmentevelopmentevelopmentevelopment
For the purpose this study, the importance of shopping center development will be
discussed from four angles to explain how the shopping center development could
help with social, urban, economic and environmental development.
A well designed shopping center offers an eco-friendly and sustainable environment
in one technically advanced building. New shopping centers are designed and built
to the latest technical and environmental standards. (Tegner, 2009) Possibilities to
obtain new standards are the use of: Geothermal energy Solar energy, sorting and
recycling of waste, use of ecologically sustainable materials in the construction
process, use of heat exchangers and reuse of rainwater. A shopping center
accessible via a choice of transport offers environmentally sustainable consumer
travel. Carrying out many errands in one journey is more eco-friendly than a single
item purchase. There are different possibilities to reach a regional shopping center.
Besides the most common, car travel, it is often possible to use public transport
35
links, particularly when the regional shopping center is located close to residential
and commercial areas. If there is not an already installed public transport network in
an area, a shopping center can often contribute to public transport services by
investments and tax revenues. A shopping center is often well located between
where people work and live. So it is also possible and convenient for the customers
to shop on the way home or to work. This reduces the transporting mileage, which is
economically and environmentally sustainable as well as time saving.(Tegner, 2009)
A shopping center with direct access to the national road network offers efficient and
environmentally sustainable goods distribution. Customers combine many purchases
in one visit and transport the goods straight to their homes. Even when the shopping
trip is done by private car, the overall environmental impact is kept to a minimum.
There will be less heavy load traffic in the town centers and fewer congestion
problems because fewer transporters get into narrow streets in crowded town
centers. There will be lower emissions with less noise, light and sound disturbances.
In a regional shopping center it is possible to store more goods. Huge delivery of
goods is needed more seldom, because of the storage possibilities. The customers
also benefit from the storage of goods; because they can be assured that the whole
range of goodsis available. (Tegner, 2009)
36
2.72.72.72.7 CaseCaseCaseCase studies analyzing the impact of shopping mall on the studies analyzing the impact of shopping mall on the studies analyzing the impact of shopping mall on the studies analyzing the impact of shopping mall on the surroundingsurroundingsurroundingsurrounding
resideresideresideresidential property values and ntial property values and ntial property values and ntial property values and supplysupplysupplysupply
Emrath (2002) provided evidence that having satisfactory shopping within one mile
increased housing prices substantially inside metro areas. Others, including Sirpal
(1994) and Des Rosiers et al. (1995), have also found a positive correlation between
shopping centers and housing prices.
2.72.72.72.7.2.2.2.2 Case study ofCase study ofCase study ofCase study of Bugis Junction and Suntec City in SingaporeBugis Junction and Suntec City in SingaporeBugis Junction and Suntec City in SingaporeBugis Junction and Suntec City in Singapore
In the early development of Singapore, the shopping belt was confined to the central
part of Singapore along Scotts Road and Orchard Road. Over time, more shopping
centres such as Bugis Junction and Suntec City were built in the fringe areas.
Moreover, with approximately 85% of Singapore’s population residing in HDB
housing estates (General Household Survey 2005), planned shopping centre is a
common feature in all estates as each public housing estate is planned to be a self-
sufficient town to meet the day to day needs of the residents. (Addae-Dapaah,
2010) states that as Singapore developed, the shopping facilities in the town centres
slowly evolved from being housed in shop houses to integrated retail developments
(shopping malls) offering all sorts of services. Currently, the shopping areas in HDB
towns (i.e. neighbourhood shopping centre in planning terms) offer a ‘one-stop’
shopping experience and have become a focal point for neighbourhoods to enhance
community living.
37
Shopping centre is an externality that simultaneously exerts attractive as well as
repulsive effects which can impact household’s location choice. Addae-Dapaah in his
study used the hedonic pricing model to analyze 8627 sales to ascertain the
proximity effect of shopping malls on the price of HDB apartments. The results reveal
that homebuyers pay an average premium of 4.7% for shopping centre proximity
factor. However, the premium varies from estate to estate, ranging from 23.8% (in
Marine Parade) to 1.7% (in Bedok Estate). Furthermore, Flats within the 100m radius
from the shopping centre command the highest premium of 15%. The price premium
for this attribute decreases with increases in the distance from the shopping centre.
However, the decline in premium does not show a consistent pattern. The findings
also show that the price-distance relationship for the proximity factor to shopping
centre is likely to stretch beyond 500m. Flats within a town centre with a shopping
mall on the average, are considered more attractive. Homebuyers pay a price
premium of 6.1% for a flat located in an estate with a shopping mall as opposed to
one without.
2.72.72.72.7.3.3.3.3 The effectThe effectThe effectThe effect of Kasuwanof Kasuwanof Kasuwanof Kasuwan Laushi Super Market on SurroundLaushi Super Market on SurroundLaushi Super Market on SurroundLaushi Super Market on Surrounding Residential ing Residential ing Residential ing Residential
Aliyu et.al (2011), Kasuwan Laushi is a neighborhood shopping center, located at
2110 Wunti Road, Bauchi metropolis. The center has a lot area of 282,000square
feet and consists of ten small retail stores and one independent grocery store. Aliyu
et.al (2011) in their research adopted the Hedonic regression model which been
developed to explain the variations in property values before and after the
38
announcement of the proposed shopping center to investigate the effect of Laushi
Supermarket on residential accommodations. They found out that the
announcement of the proposed shopping center had both negative and positive
effects on the value of residential properties. At distances closer than 1,500 feet,
diseconomies appear to dominate. Beyond 1,500 feet, economies appear to
dominate. The trade-off between values proximate to the shopping center and
properties served by the center, but removed from its negative effects, would seem
to suggest there may be an optimal spatial frequency of these small shopping
centers.
2.72.72.72.7.4 .4 .4 .4 Case of WalCase of WalCase of WalCase of Wal----mart and its effects on residential property valuesmart and its effects on residential property valuesmart and its effects on residential property valuesmart and its effects on residential property values
Shulman (2009) examined the effect of a Wal-Mart’s entrance on residential property
values in five Colorado communities and found that proximity to a Wal-Mart
decreases residential property value. However, they also find evidence of the
possibility that the convenience of being in close proximity to the store may outweigh
the negative effect on property values in some instances. In addition several studies
suggest that the introduction of a Wal-mart store in a community has the potential to
lower housing prices through increased local crime, noise and light pollution, traffic
congestion, garbage accumulation, and loss of perceived visual aesthetics. These
disamenities are capitalized into housing prices. For example, Linden and Rockoff
(2008) and Pope (2008) have both recently shown that a discrete change in the risk
of a localized crime can have a causal impact on housing prices, Smith et al. (2002)
39
showed that freeway noise can have a negative impact on housing prices, and Lim
and Missios (1995) showed the negative impact of landfills on housing prices.
However Jaren and Devin (2013) in their research compared the areas very near the
Wal-Marts to areas slightly further away before and after the Wal-Marts opened. The
results from their primary difference-in-differences specification suggest that a new
Wal-mart store actually increases housing prices by between 2 and 3 percent for
houses located within a half mile of the store and by 1 to 2 percent for houses
located between a half and one mile from the store. For the average priced home in
these areas this translates into an approximate $7,000 increase in housing price for
homes within a half mile of a newly opened Wal-mart and a $4,000 increase for
homes between a half and one mile. Overall, the estimated capitalization effects that
they found suggest a revealed preference by many households to live near a Wal-
mart and the stores that naturally agglomerate nearby. On average, the benefits to
quick and easy access to the lower retail prices offered by Wal-mart and shopping at
these other stores appear to matter more to households than any increase in crime,
traffic and congestion, noise and light pollution, or other negative externalities that
would be capitalized into housing prices.
2.82.82.82.8 Factors leading to iFactors leading to iFactors leading to iFactors leading to increased development oncreased development oncreased development oncreased development of shopping mallsf shopping mallsf shopping mallsf shopping malls in Nairobiin Nairobiin Nairobiin Nairobi
Fernridge Consulting (2012) in their research stated that, In an environment of global
turbulence and domestic shocks, Kenya recorded moderate economic growth of
4.4% in 2011. For the second consecutive year, the economy experienced positive
growth across all quarters and sectors, even though agriculture performed poorly.
Kenya’s economic growth for the last four years has been relatively modest. Since
the 2008 crisis, Kenya has been growing at an average of 3.5% per annum, well
below the average for Sub-Saharan Africa (5.5%, excluding South Africa) and
significantly slower than the East African Community (EAC) countries, some of which
are among the fastest growing developing countries in the world. The World Bank
maintains its growth forecast for Kenya of 5.0% for 2012 and for 2013, a moderate
rate that will be driven by consumption. Growth could reach 5.4% in a high growth
scenario, but it could also dip further to 4.1% in the low case.
41
Kenya’s economy is stabilising gradually. After sailing through rough waters in 2011,
the economy is back on track to achieve 5% growth in 2012. Three main factors
underpinned stabilisation:
First, the Government’s determined action to increase interest rates during the third
quarter of 2011 and prudent fiscal policies sent important signals to the markets and
this also helped to stabilise the exchange rate.
Secondly Inflation has started to decline sharply, due to the lower international food
and energy prices and thirdly Kenya’s service sector continued to expand strongly,
with very good results in tourism. GDP growth for Q1 2012 slowed to 3.5% as
compared to 5.1% in Q1 2011. Some of the factors behind the slowdown include the
delay in the onset of rains, frost in January, high inflation and tight monetary
conditions. The sectors that registered improved performance include Electricity up
10.8%, Transport and Communication (5.9%) and Agriculture (2.3%). Financial
intermediation and the construction sectors decelerated the most growing by 3.8%
and 3.2% against 12.6% and 7.0% respectively in the prior year.
2.82.82.82.8.3.3.3.3 GrowGrowGrowGrowth of the middle class in Kenyath of the middle class in Kenyath of the middle class in Kenyath of the middle class in Kenya
The African Development Bank defines the African middle class as those spending
between US$2 and US$20 a day. Africa’s middle class has tripled over the last 30
years, with one in three people now considered to be living above the poverty line -
but not among the wealthy. The current trajectory suggests that the African middle
class will grow to 1.1 billion (42%) in 2060.
42
The major boom in population growth also generates a massive demand in the
middle class for goods and services. A typical African middle class family does not
generate an income from farming or rural activities. They generally live in urban
centres, have a higher level of tertiary education, and hold salary jobs to name a few
characteristics. Kenya’s middle class has grown to 10% of the urban population or
1.5 million people making Kenya home to one of the largest middle class populations
in sub-Saharan Africa.The AFDB estimates that about 16.8 percent or 6.7 million
Kenyans belong to the middle class, capable of spending $2 to $20 per day. The
World Bank estimates that less than 2 percent of Kenyans belong to the global
middle class, spending $10 and $20 a day. According to Kenya National Bureau of
Statistics, 1 in 5 Kenyans is in the middle class, which includes individuals spending
between $10 and $100 a day. That 1 in 5 Kenyans is the middle class is highly
improbable because only 12.4 percent, about 5.1 million Kenyans, work for a wage,
in the informal and the modern sector of the economy. This is according to figures
computed by the World Bank, based on the 2009 census and the 2012 Economic
Survey .Strong economic growth in the past two decades has helped reduce poverty
significantly and lift previously poor households into the middle class.
2222.8.8.8.8.4.4.4.4 Increased Urbanization in KenyaIncreased Urbanization in KenyaIncreased Urbanization in KenyaIncreased Urbanization in Kenya
Fernridge Consulting (2012) in their research stated that the Kenya Census 2009
highlights displayed Nairobi as the smallest area with the highest population density.
Overall 68% of the Kenya population is urbanised.
43
Recent UN estimates suggest that Kenya’s urban population will expand to 38 million
by 2030 and account for 62.7 percent of the national population. These projections
indicate that the annual urban population growth rate will average 5.2 percent up to
2010, 4.2 percent over the period 2010-20 and 3.2 percent during the succeeding
decade (UN, 2003). 64% of the total Kenyan population is below the age of 25. With
the continued investment in education and increased urbanisation, it is evident that
Nairobi will experience a wave of educated young professionals entering the active
economic market. Nairobi is without a doubt the focus point for development and
should also be the focus point of retail growth in Kenya. At this rate of urbanization
the majority of the Kenyan population will be living in urban areas within the next 20
years. Rapid urban population growth means an increasing demand for urban land,
particularly for housing, but also for various other urban uses.
In order to realize Sustainable communities in Kenya there has been increased
development of shopping centres in Nairobi’s suburbs. Sustainable communities are
places where people want to live and work, now and in the future. They meet the
diverse needs of existing and future residents, are sensitive to their environment,
and contribute to a high quality of life. They are safe and inclusive, well planned, built
and run, and offer equality of opportunity and good services for all.
Sustainable communities embody the principles of sustainable development that is,
balancing and integrating the social, economic and environmental components of
their community, meeting the needs of existing and future generations and
44
respecting the needs of other communities in the wider region or internationally to
make their own communities sustainable.
2.8.52.8.52.8.52.8.5 Improved Transport NImproved Transport NImproved Transport NImproved Transport Networketworketworketwork
Transport is an important aspect of infrastructure of a country. According to World
Bank (2011) infrastructure contributed half a percentage point to Kenya’s annual per
capita GDP growth over the last decade. Raising the country’s infrastructure
endowment to that of the region’s middle-income countries could boost annual
growth by more than 3 percentage points per capita.
World Bank (2011) the length of the trunk network is more than adequate. Even if
Kenya’s road density indicators look relatively low by some standards, the trunk
network provides basic regional and national connectivity, linking the capital to the
coast, to international border crossings, and to provincial capitals in the interior
Kenya has established a sound system for funding road maintenance. The country
has made great strides with institutional reforms. The country’s road fund meets
most of the good practice design criteria. Moreover, the fuel levy is set at a level
(around $0.12 per litre) adequate to fund the country’s road maintenance
requirements, and the associated revenues are indeed being fully captured by the
sector. The Nairobi Bypass Project is a Ksh 41.3 billion road project which will see
the construction of 3 roads around the city to aid in the easing traffic snarl-up within
Nairobi. These 3 roads are the Northern Bypass, Southern Bypass and Eastern
Bypass.The entire length of the roads is 98 km or paved road. All the roads will be
single or double carriageway and will be able to accommodate 2 HCV (Heavy
45
Commercial Vehicles) on opposite directions.The 3 roads shall form a "ring" around
Nairobi and its environs with feeder roads, linking every part of Nairobi, making the
country a regional business hub. There is also The Nairobi-Thika Highway which
links downtown Nairobi to the suburbs and satellite towns. The former The Kenyan
President Mwai Kibaki officially inaugurated the superhighway connecting Nairobi
and Thika in November 2012. The superhighway is expected to boost the economy
of the East African Zone. The eight-lane highway is 50km long, starting from Nairobi
and running up to the outskirts of Thika. The Nairobi-Thika superhighway covers
several locations such as Marsabit, Lsiolo and Moyale. The route covered by the
project is a vital element of the Great North-Trans African Highway, which links Cape
Town and Cairo. The improved road transport has lead to increased economic
activities along these major roads, shopping malls being one of them. Along the
Northern by pass, we have the Two Rivers Mall which comprising of 281,000sqm of
built up area coming up, along the Thika super highway we have the Garden city
mall which comprises of 50,000 sqm of built up area and along the southern bypass
we have The Hub which comprises of 35,000 sqm of built up area coming up.
The population of study will consist of professional staff and of real estate
companies, real estate developers and residents within one kilometer radius from the
Junction shopping centre. These are the people best placed to provide the required
information.
3.33.33.33.3 Sample and Sample and Sample and Sample and Sampling TSampling TSampling TSampling Techniqueechniqueechniqueechnique
Sampling is that part of statistical practice concerned with the selection of individual
observations intended to yield some knowledge about a population of concern,
especially for the purposes of statistical inference. Since a sample will be selected
48
from real estate firms in Nairobi and residents around the Junction, it is assumed that
selecting one firm is the same as selecting the other. Thus, the sample size for this
study will be selected using convenience sampling technique.
Convenience sampling (sometimes known as grab or opportunity sampling) is a type
of non-probability sampling which involves the sample being drawn from that part of
the population which is close to hand. That is, a sample population selected because
it is readily available and convenient. This method is used when one is unable to
access a wider population, for example due to time or cost constraints. The sample
size will be 80 respondents which are considered appropriate.
3.43.43.43.4 Reliability and Validity of DaReliability and Validity of DaReliability and Validity of DaReliability and Validity of Data Ita Ita Ita Instrumentsnstrumentsnstrumentsnstruments
According to Straight (1993), validity refers to the extent to which an instrument
measures what it intends to measure. In order to ensure the validity of these
instruments, the questions on the questionnaires will be constructed in a manner that
the responses only provide answers to the research questions. Piloting test will be
conducted with a sample of 5 respondents from 5 respondents who will not be part of
the final sample respondents for the study. The pilot study will be necessary to
determine validity of the instruments and enable the researcher to determine
whether the respondents understand the question. Reliability of measurements
concerns the degree to which a particular measuring procedure gives similar results
over a number of repeated trials. It also refers to the consistency of an instrument to
yield the same results at different times. The researcher will use test re-test type of
method in order to establish the reliability of the instruments. Test re-test method is
49
applied where a test is given to respondents then after some time given again, gives
the same results. The researcher will make a comparison between answers obtained
from the two groups of respondents and the responses will be consistent with the
instruments hence deemed reliable. A Pearson’s product moment formula for the
test – retest will be employed to compute the correlation, coefficient in order to
establish the extent to which the content of the questionnaires will be consistent in
eliciting the same responses every time the instrument is administered.
This chapter contains data presentation and analysis of the data collected from the
field through questionnaires, obse
their views which was analysed in order to achieve
following shows how data was analysed.
4.14.14.14.1 TheTheTheThe increase in supply increase in supply increase in supply increase in supply
Questionnaires were administered to real estate professionals
developers on the supply of residential units within 1 kilometer radius from the
Junction mall.
70% of the respondents were professionals in real estate firms while 30% where real
estate developers as presented in the pie chart below.
Figure 4.1.1: Pie chart present
Source: Field Survey 2014
30%
Distribution of Respondents
CHAPTER FOURCHAPTER FOURCHAPTER FOURCHAPTER FOUR: : : : DATA DATA DATA DATA ANALYSIS AND PRESENTATIONANALYSIS AND PRESENTATIONANALYSIS AND PRESENTATIONANALYSIS AND PRESENTATION
This chapter contains data presentation and analysis of the data collected from the
questionnaires, observations and interviews. The respondents gave
their views which was analysed in order to achieve the objectives of his
g shows how data was analysed.
increase in supply increase in supply increase in supply increase in supply of highof highof highof high end residential unitsend residential unitsend residential unitsend residential units
Questionnaires were administered to real estate professionals
on the supply of residential units within 1 kilometer radius from the
70% of the respondents were professionals in real estate firms while 30% where real
estate developers as presented in the pie chart below.
chart presentation of the distribution of respondents
70%
Distribution of Respondents
Real estate firm professionals
Real estate developers
50
ANALYSIS AND PRESENTATIONANALYSIS AND PRESENTATIONANALYSIS AND PRESENTATIONANALYSIS AND PRESENTATION
This chapter contains data presentation and analysis of the data collected from the
rvations and interviews. The respondents gave
the objectives of his study.... The
and real estate
on the supply of residential units within 1 kilometer radius from the
70% of the respondents were professionals in real estate firms while 30% where real
of the distribution of respondents
Real estate firm professionals
Real estate developers
51
8% of the residential units within 1 kilometre radius from the Junction Mall were
completed prior to 2004, before the shopping centre was developed.
25% of the residential units within 1 kilometre radius from the Junction Mall were
completed between 2005 and 2011 a period during which the phase 1 of the
Junction mall has been operational.
67%of the residential units within 1 kilometre radius from the Junction Mall were
completed between 2012 and 2014 a period during which the phase 2 of the
Junction mall has been operational.
The analysis of this data is presented in the table below.
Table 4.1Table 4.1Table 4.1Table 4.1.2.2.2.2:::: The number of residential units ejected in the market
NO.OF RESIDENTIAL
UNITS
PERCENTAGE YEAROF
COMPLETION
101 8% BEFORE 2005
332 25% 2005 - 2011
869 67% 2012 - 2014
Source: Field Survey 2014
52
Figure 4.1.3 Bar graph Presentation of the residential units ejected in the market
Source: Field Survey 2014
In addition on the issue of increased supply of high end residential units
questionnaires were also administered to residents within 1 kilometer radius from the
Junction. The data collected is analyzed below.
50
150
250
350
450
550
650
750
850
950
Before 2004 2005 - 2010 2011 - 2014
Number of units
Year
The Number of units ejected in the market
No of
Units
Figure Figure Figure Figure 4.1.44.1.44.1.44.1.4 Pie chart presentatio
Source: field survey 2014
62% of the respondents ranked
reason for the increased development
radius from the Junction.
Kenya as the reason for the increased supply of the
1 kilometer radius from the Junction mall.
13% of the respondents mentioned improved infrastructure at the reason for
increased supply of the high
mall.
48%
12%
Characteristics of the residents
Pie chart presentation on the resident’s characteristics
ranked proximity to The Junction mall as the number one
reason for the increased development of high end residential units within 1 kilometer
25% of the respondents mentioned property boom in
Kenya as the reason for the increased supply of the high end residential
1 kilometer radius from the Junction mall.
spondents mentioned improved infrastructure at the reason for
increased supply of the high end residential within a 1 kilometer from The Junction
10%
30%
Characteristics of the residents
Below 30 years
Between 30
Between 40
Above 60 years
53
e Junction mall as the number one
residential units within 1 kilometer
of the respondents mentioned property boom in
residential units within
spondents mentioned improved infrastructure at the reason for
within a 1 kilometer from The Junction
Below 30 years
Between 30-40 years
Between 40-50 years
Above 60 years
Figure 4.1.5 Pie chart presentation
Source: Field Survey 2014
4.24.24.24.2 The effect of The Junction mall on residential units pricesThe effect of The Junction mall on residential units pricesThe effect of The Junction mall on residential units pricesThe effect of The Junction mall on residential units prices
Questionnaires were also administered to professionals in real estate firms,
their views on whether The Junction has mall has had effect on the increase
prices for high end residential units increased over the last eight
kilometer radius from the Junction.
there has been an increase in prices for the high end residential units over the
eight years. The data collected is presented in the table below according
many residential units where completed in the respective year
developer or the real estate firm was selling the units for. All the residential units in
the data presented are three bedroom apartments
25%
13%
Residential units supply
Pie chart presentation of the supply of residential units
The effect of The Junction mall on residential units pricesThe effect of The Junction mall on residential units pricesThe effect of The Junction mall on residential units pricesThe effect of The Junction mall on residential units prices
Questionnaires were also administered to professionals in real estate firms,
heir views on whether The Junction has mall has had effect on the increase
for high end residential units increased over the last eight
kilometer radius from the Junction. Almost 100% of the respondents mentioned that
there has been an increase in prices for the high end residential units over the
The data collected is presented in the table below according
where completed in the respective year and how much the
developer or the real estate firm was selling the units for. All the residential units in
presented are three bedroom apartments.
62%
Residential units supply
Proximity to the Junction
Property boom
Improved infrastructure
54
Questionnaires were also administered to professionals in real estate firms, to give
heir views on whether The Junction has mall has had effect on the increase the
for high end residential units increased over the last eight years within 1
the respondents mentioned that
there has been an increase in prices for the high end residential units over the last
The data collected is presented in the table below according to how
and how much the
developer or the real estate firm was selling the units for. All the residential units in
Proximity to the Junction
Property boom
Improved infrastructure
55
The table 4.2.1 Price shift over time.
YEAR OF COMPLETIONYEAR OF COMPLETIONYEAR OF COMPLETIONYEAR OF COMPLETION NO OF UNITSNO OF UNITSNO OF UNITSNO OF UNITS PRICE(KSH)PRICE(KSH)PRICE(KSH)PRICE(KSH)
2007 50 6,500,000
2008 75 9,000,000
2009 101 10,500,000
2010 207 13,500,000
2011 271 14,000,000
2012 398 15,000,000
2013 532 17,500,000
2014 712 20,000,000
Source: Field Survey 2014
Figure 4.2.2 Bar graph presentation of price shift over time
Source: Field Survey 2014
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2007 2008 2009 2010 2011 2012 2013 2014
Ksh
Sh
illi
ng
s
Year of Completion.
Price Shifts over time
4444.3.3.3.3 Residents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing units
When asked on whether The
location;
i. 65% of the respondents mentioned the Junction Mall as a key factor they
considered before relocating to their current location.
ii. 25% of the respondents mentioned that The Junction didn’t c
location but suitability of the accommodation as the main reason they
relocated to the current premises
iii. 10% of the respondents mentioned other factors like proximity to schools like
Makini, Riara school and church as reasons as to why th
current premises. This data is presented in the pie chart below.
Figure 4.3.1 Pie chart presentation
Source: Field Survey 2014
25%
10%
Factors affecting choice of location
Residents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing units
The Junction mall was a contributing factor into their current
% of the respondents mentioned the Junction Mall as a key factor they
considered before relocating to their current location.
% of the respondents mentioned that The Junction didn’t c
location but suitability of the accommodation as the main reason they
relocated to the current premises
10% of the respondents mentioned other factors like proximity to schools like
Makini, Riara school and church as reasons as to why th
This data is presented in the pie chart below.
.1 Pie chart presentation of the factors affecting choice of location.
65%
10%
Factors affecting choice of location
Proximity to The Junction
Sutability of accomodation
Other factors like schools
56
Residents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing unitsResidents response on the increased prices for residential housing units
Junction mall was a contributing factor into their current
% of the respondents mentioned the Junction Mall as a key factor they
% of the respondents mentioned that The Junction didn’t contribute to their
location but suitability of the accommodation as the main reason they
10% of the respondents mentioned other factors like proximity to schools like
Makini, Riara school and church as reasons as to why they choose the
This data is presented in the pie chart below.
of the factors affecting choice of location.
Proximity to The Junction
Sutability of accomodation
Other factors like schools
The residents living within one
administered with a questionnaire asking them on whether they would be willing to
pay a premium to live close to Junction.
i. 60% of the respondents said they would be willing to pay a premium in order
to enjoy the benefits
close to the Junction mall.
ii. 30% of the respondents said they would not pay
Junction. They mentioned some of the factors
such as terrorism, noise
iii. 10% of the residents were not keen on answering this particular
questionare.This data is presented in the pie chart below.
Figure 4.3.2 Bar graph presentation
Source; Field Survey 2014
0%
10%
20%
30%
40%
50%
60%
70%
Willing to pay a premium
PE
RC
EN
TA
GE
Siving within one kilometer radius from the Junction
administered with a questionnaire asking them on whether they would be willing to
a premium to live close to Junction.
0% of the respondents said they would be willing to pay a premium in order
to enjoy the benefits like easy access of recreational facilities etc
close to the Junction mall.
30% of the respondents said they would not pay high rates to live close to the
Junction. They mentioned some of the factors that would discourage them
, noise, traffic congestion etc
10% of the residents were not keen on answering this particular
questionare.This data is presented in the pie chart below.
.2 Bar graph presentation of the residents willingness to pay a premium
Willing to pay a premium Not willing to pay a premium Indifferent
RESPONSES
Effect on Prices
57
the Junction mall were also
administered with a questionnaire asking them on whether they would be willing to
0% of the respondents said they would be willing to pay a premium in order
like easy access of recreational facilities etc of residing
to live close to the
that would discourage them
10% of the residents were not keen on answering this particular
to pay a premium
Indifferent
58
4.44.44.44.4 Research OResearch OResearch OResearch Observations.bservations.bservations.bservations.
The researcher made the following observations in the course of the data collection
through field survey.
4.44.44.44.4.1.1.1.1 The Plot Ratio RThe Plot Ratio RThe Plot Ratio RThe Plot Ratio Reduction.eduction.eduction.eduction.
The developers are now developing more blocks beside the earlier developments in
for example on acre land. Due to increased demand for housing and the need to
maximize on profits developers are now developing 4 blocks on one acre plot on
Riara Road, Gitanga Road, Masanduku Lane and Hatheru Road unlike in 2007
where one block of apartments sat on one acre plot.
4.44.44.44.4.2 .2 .2 .2 Increase in thIncrease in thIncrease in thIncrease in the Ne Ne Ne Number of Sumber of Sumber of Sumber of Storeys.toreys.toreys.toreys.
The real estate developers have also increased the number of storeys put up on the
apartment blocks.In 2007 the apartments had upto a maximum of four storeys but
currently in 2014 the storeys go up to seventeen storeys with lift provision.
The hypothesis of the study was that; the increased development of shopping malls
has impacted on the Kenyan residential property market. The findings of the study
supported the hypothesis as it was shown that the development of The Junction
shopping centre has lead to increased prices of high end residential housing units.
The increase in prices according to the findings of this study is attributed to the
increased demand for residential units within 1 kilometer radius from the Junction
shopping centre. Most of the residents who were interviewed preferred living close to
the Junction shopping centre and were even willing to pay a premium for it because
of the benefits offered by the centre like quick and easy access to household goods
and recreational facilities.
The findings of this study have also shown that the development of the Junction
shopping centre has led to an increased supply of high end residential housing units
60
within 1 kilometer radius. In order to meet the increased demand for high end
residential units developers have had to eject more units into the market. Almost
100% of the developers who were interviewed mentioned that they have had to
increase the number of storeys in apartment blocks or developed an extra block of
apartments beside the existing one.
It is therefore evident from the finds of this study that the development of shopping
centers creates a vibrant residential property market in the surrounding areas.
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CHAPTER FIVECHAPTER FIVECHAPTER FIVECHAPTER FIVE: : : : CONCLUSIONS AND CONCLUSIONS AND CONCLUSIONS AND CONCLUSIONS AND RECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONSRECOMMENDATIONS
Based on findings and conclusions that have already been made, the following
measures are recommended.
That future development of shopping centers in Nairobi should be well planned and
strategic bearing in mind that their development affects the neighbouring residential
market. In order for Kenya to bridge the gap between demand for residential housing
units and supply, Kenyan developers, real estate firms, the government and all other
key stakeholders involved in real estate market, should view shopping centre
development in the Nairobi’s suburbs and neighbouring estates as a means of
resolving the shortage of residential housing units.
64
In addition all the key stakeholders in real estate which include the Government, real
estate researchers and professionals should be involved during the planning of a
new shopping centre in an effort to ensuring holistic planning and consideration of
the effects that the shopping centre might have on the real estate market and the
general economy of Kenya.
It is also important that Real estate developers try to minimize the negative
externalities like crime, traffic and congestion, insecurity, noise and light pollution etc
which tend to discourage people from living close to the shopping centers.
Future shopping center developments should be encouraged not only in the high end
suburbs but also in the low end areas. This will consequently increase the supply of
low end residential housing units where the demand for housing units in Kenya is
high. Both the local and National Government of Kenya should encourage policies
and incentives that are investor friendly so as to increase shopping mall
development in Kenya which consequently contributes to a vibrant real estate
market.
5.35.35.35.3 Areas of further Areas of further Areas of further Areas of further researchresearchresearchresearch
• Since shopping centers are becoming increasingly popular in Kenya and
especially in Nairobi, studies need to be conducted on the effects that the new
shopping centers have on the already existing shopping complexes.
• Studies to be also conducted on the effect of the increased shopping centre
development on the Kenyan commercial real estate market.
65
BIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHY
i. ADFB, (2013): African Housing Dynamics: Lessons from the Kenyan Market,
African Economic group.
ii. ADFB, (2011): The Middle of the Pyramid: Dynamics of the Middle Class in
Africa, African Development Bank.
iii. Cecilia M. and Maria S. (2011): Kenya’s Infrastructure: a Continental
Perspective
iv. Policy Research Working Paper.
v. Cox, W. and Cooke, E. (1970): Other Dimensions Involved In Shopping
Centre Preference, Journal of Marketing.
vi. Des Rosiers, F. and A. Lagana (1995): Shopping centres and house values:
an empirical investigation, Journal of Property Valuation and Investment.
vii. François D.et al. (1996): Shopping centres and house values: an empirical
investigation, Journal of Property Valuation &Investment, Vol. 14.
viii. Hickman, E, Gaines, J. and Ingram, F.J. (1984): The influence of
neighbourhood quality on residential values: The Real Estate Appraiser and
Analyst, Vol. 50.
ix. Howell, R. and Rogers, J. (1981): Research into Shopping Mall Choice
Behavior, Advances In Consumer Research: Association for Consumer
Research.
x. ICSC (2000): ICSC shopping center definitions: Basic configurations and
types.
66
xi. Ikhram,(2013): How Shopping Malls Affect Property Value, Journal of
marketing.
xii. John D. and Mark E. (1994): The Evolution of Shopping Center Research: A
Review and Analysis.
xiii. John J. (1975): Retail Centre Planning and Central Place Theory; Journal of
the Town Planning Institute.
xiv. Kwame A. (2010): Shopping Centres and the Price of Proximate Residential
Properties; Department of Real Estate, SDE, National University of
Singapore. Liangping Wang (2011): Shopping center development in China:
Current situation, challenges and solutions; Division of Building and Real
Estate.
xv. Lowe M. (2000): Britain’s regional shopping centres: New urban forms? Urban
Studies. Vol.37, No.2.
xvi. Mu B. (2010): American Shopping Centre Development History; Financial
xvii. Economics Shanghai.
xviii. Njau (2011): Sustainable Urban Communities: Challenges and Opportunities
in Kenya’s Urban Sector; International Journal of Humanities and Social
Science Vol. 1 No. 4.
xix. Richard, A. (1991): A brief history of the mall: Advances in Consumer
Research Volume 18, Association for Consumer Research.
xx. Stephen, W.( 2007): Housing challenges in sub-saharan Africa;International
Housing Coallition.
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xxi. Winger, A. (2007): How important is distance from the Centre as a
Determinant of Urban Residential Values, Appraisal Journal.
Web source:Web source:Web source:Web source:
xxii. A brief history of shopping centres, June ICSC.
xxiii. http://www.icsc.org/srch/about/impact of shopping centers/briefhistory.html
xxiv. Wikipedia, Shopping mall explanation.
xxv. http://en.wikipedia.org/wiki/Shopping_mall
xxvi. American shopping center development history.
xxvii. http://www.verylib.com.cn/read/read.html
xxviii. www.investopedia.com
68
APPENDIX1:APPENDIX1:APPENDIX1:APPENDIX1: QUESTIONNAIRE TO REAL ESTATE DEVELOPERS AND QUESTIONNAIRE TO REAL ESTATE DEVELOPERS AND QUESTIONNAIRE TO REAL ESTATE DEVELOPERS AND QUESTIONNAIRE TO REAL ESTATE DEVELOPERS AND
PROFESSIONALS IN PROFESSIONALS IN PROFESSIONALS IN PROFESSIONALS IN REALREALREALREAL ESTATE FIRMS.ESTATE FIRMS.ESTATE FIRMS.ESTATE FIRMS.
Dear Respondent,
I am a student at the University of Nairobi pursuing a Diploma course in Real
Estate Agency and Property Management.
I am conducting a research project on the impact on increased shopping centre
development on residential market in Nairobi.
Please fill in the blank spaces as honestly as you can. All information provided will
betreated with utmost confidentiality.
NAME……………………………………………………………
PROFESSION……………………………………………………
Q1. What is the name of the residential development you have put up close to The
Junction?
……………………………………………………………………………….
Q2. How many units does the development comprise of?
Q6. Please indicate the asking price for the residential units below.
Unit 3 bedroom 4 bedroom
Sale Price
Rental rate/Month
Q7.Do you think the proximity of the development toThe Junction Mall has had an
increase on the prices? Yes ( )
No ( )
Q8.If yes in the above please tick by what percentage below.
PERCENTAGE
300%
250%
200%
150%
100%
50%
70
APPENDIXAPPENDIXAPPENDIXAPPENDIX 2: 2: 2: 2: QUESTIONNAIREQUESTIONNAIREQUESTIONNAIREQUESTIONNAIRE TTTTO THE RESIDENTSO THE RESIDENTSO THE RESIDENTSO THE RESIDENTS CLOSE TO THE CLOSE TO THE CLOSE TO THE CLOSE TO THE
I am a student at the University of Nairobi pursuing a Diploma course in Real
Estate Agency and Property Management.
I am conducting a research project on the impact on increased shopping centre
development on residential market in Nairobi.
Please fill in the blank spaces as honestly as you can. All information provided will
betreated with utmost confidentiality.
NAME……………………………………………………………
GENDER ……………………………………………………
AGE........... Below 30years ( )
Between 30-40 years ( )
Between 40-50 years ( )
Between 50-60 years ( )
Above 60 years ( )
Q1. Do you think there has been an increase residential development around The
Junction in the last seven years?
Yes
No
71
If your answer is yes in the above please tick on the table what you think might have
led to this increase.
Q2. Would you be willing to pay a premium to live close to the Junction?
Q3.If your answer is yes above would you say The Junction contributed to your
current location?................................................................................................
REASON
Proximity to The Junction
Improved infrastructure
Property boom
Yes
No
72
APPENDIXAPPENDIXAPPENDIXAPPENDIX 3: 3: 3: 3: SECTIONS OF THE JUNCTION MALLSECTIONS OF THE JUNCTION MALLSECTIONS OF THE JUNCTION MALLSECTIONS OF THE JUNCTION MALL