Kenya's wealthy Muguku family nears $70 million sale of Waterfront Karen mall

The family of the late Kenyan poultry billionaire Nelson Muguku is in advanced talks to sell The Waterfront Karen mall in Nairobi for as much as 9 billion shillings, about $70 million, marking a retreat from a property bet the heirs once valued at more than double that figure.

A source familiar with the negotiations told Business Daily the family is at the tail end of talks over the high-end shopping complex. Ken Obimbo, the property's manager, confirmed the process on the record without discussing the price, saying the owners had been in the market and believed they had a serious buyer on the table.

The transaction would reverse a strategy the family adopted more than a decade ago, when it sold down its holding in Equity Group on the Nairobi Securities Exchange to build a property portfolio. The Waterfront was the centrepiece of that shift.

A price that has fallen by more than half

The family first tested the market in April 2021, when a leaked sale document put an asking price of 20 billion shillings on the mall together with the 50 acres surrounding it, one of the largest single-property asking prices ever made public in Kenya.

The family moved quickly to distance itself from the document at the time. David Muguku, son of the late founder and managing director of The Waterfront, issued a statement calling the reports false and saying the mall remained a long-term investment intended to provide a world-class shopping and lifestyle experience. He said any information about a sale would come through official channels.

Five years on, the family is in the market at a figure less than half that original ask. The gap reflects both the narrower scope of the current transaction and a sharp deterioration in the economics of Kenyan retail property.

Anchor tenants and a shrinking market

The mall opened in 2018 at a build cost estimated at about 3 billion shillings, sitting on 13.8 acres including a man-made lake covering 3.5 acres, with more than 1,000 parking bays and 1.2 kilometres of walking and cycling tracks. It was constructed by CJRE East Africa, a subsidiary of China Railway Group.

Its tenancy history has been unstable. The South African retailer Game opened as anchor tenant and later exited. Crossroads Limited and Karen Waterfront Phase Two Limited signed a ten-year lease with Shoprite in November 2019, but the chain terminated the agreement within a year and withdrew from Kenya entirely, closing stores at City Mall Nyali, Westgate and Garden City. Naivas subsequently took anchor space.

The wider market has worked against the asset. A building boom over the past decade added substantial retail floorspace across Nairobi at the same time as consumer habits shifted toward neighbourhood centres and mixed-use developments. Knight Frank reported occupancy of 78 percent across the prime retail space it manages in Kenya last year. Slowing footfall and pressure on rental yields have pushed a number of high-net-worth investors to reduce their exposure to shopping centres.

From chickens to Equity Bank

Nelson Muguku built his fortune from poultry farming in Kikuyu, on the outskirts of Nairobi, turning a small operation into Muguku Poultry Farm with a modern hatchery. He died on October 10, 2010, at the age of 78 after a short illness, leaving an estate valued at roughly 10 billion shillings.

The larger part of that wealth came from an early stake in Equity Bank, where he was among the founding investors before the lender's transformation into one of East Africa's largest banking groups. His heirs sold shares worth more than 4 billion shillings following Equity's listing on the Nairobi bourse in August 2006, dropping out of the register of top shareholders and redirecting the proceeds into property.

The family's remaining real estate holdings include the former Standard Chartered Bank Kenya offices on Moi Avenue in central Nairobi and the Cross Roads Shopping Centre, located about 850 metres from The Waterfront. The family's investment vehicles include Crossroads Limited and Karen Waterfront Phase Two Limited.

A pivot away from property

The sale, if completed, would mark a decisive move away from the direct property ownership the family embraced after leaving the Equity share register. It also stands as a reference point for the state of Kenyan retail real estate, where an asset marketed at 20 billion shillings five years ago is now the subject of talks at a fraction of that level.

The buyer has not been identified and neither side has confirmed a final price. The family has not issued a public statement on the current negotiations.