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Tatu City – East Africa’s largest property development rises from the ground up

Tatu City – East Africa’s largest property development rises from the ground up

East Africa’s largest real estate project is rapidly taking shape as the region’s newest, most modern city. Although planned as a 20 to 25-year project, Kenya’s Tatu City is already beating its own infrastructure deadlines and demand for land within Tatu has exceeded expectations.

“Initially, Tatu City was going to be built on 2 500 acres but that was recently doubled to 5 000,” says Alex Njage, partner and head of Real Estate & Construction at the Kenya offices of pan-African law firm Bowmans, lead attorneys for the Tatu project.

Taking pressure off congested Nairobi

Located 24 kilometres from the city centre of Nairobi, Tatu City is being built from the ground up as a fully-fledged city that will take some of the pressure off the densely populated, increasingly congested capital city, Njage says. The owners, who are self-funding the development, are Rendeavour, one of Africa’s largest urban developers, which have developed or are developing other real estate projects in Ghana, Nigeria, Zambia and Democratic Republic of Congo.

The light industrial zone within Tatu City is already home to several major local and international FMCG manufacturers and logistics companies, which have already started construction of their plants and warehouses. The fully serviced residential stands are selling fast and the first school has already opened its doors. Preparations are well in hand to secure the city’s own water and power supply.

“This is intended to be a proper city, complete with its own power and water supply, and designed for mixed use – residential, commercial, industrial and recreational,” says Njage, whose team at Bowmans is handling all principal legal aspects of the project. This includes establishing the Tatu Power company, which will eventually generate all Tatu City’s power. Bowmans has advised on the best legal structure to adopt for power generation and distribution, and is in the process of handling the licensing arrangements.

Swift progress has been made with the development of the infrastructure for Tatu City, including water, drainage, fencing and roads.

“This is certainly the only mixed-use development in East Africa that has invested so much capital in its infrastructure,” says Njage, adding that a recent Deloitte infrastructure report ranks Tatu City as one of the top five high-value infrastructure investments in the East African region. The Standard Gauge Railway in Kenya is also among the top five projects.

Tatu City a Special Economic Zone

“Tatu City is one of only two projects that have been licensed as a Special Economic Zone (SEZ), with certain significant benefits for manufacturers and industrialists,” he says. “These include zero-rated value added tax, which is a huge benefit considering that VAT in Kenya is 16% and 10% corporate tax for the first 10 years.” The current corporate tax rate is 30%.

Another drawcard for industrial investors is the ready availability of work permits for a certain number of expatriates per company. “There is a quota of one-fifth of employees as expatriates,” Njage says, adding that work permits are not usually that easy to obtain in Kenya, making the quota a significant incentive.

Tatu City is also strategically located on what is known as the Eastern Bypass highway, giving it a direct connection to Nairobi’s Jomo Kenyatta International Airport and access to all major roads in Kenya, including the Trans-African Highway and the main road to Uganda, Democratic Republic of Congo, Rwanda and Burundi, all of which import most of their goods through Kenya.

“Despite the complexity of making a brand-new city function, Tatu City is accomplishing what it set out to do,” Njage says.

This is partly because of the owners’ experience with major real estate projects and partly because of the incentives available and the cooperation of Kenyan regulatory authorities, at both the county and national government level.

“All aspects of the project are going smoothly, and Tatu City is delivering what was promised - on time and in some cases even ahead of schedule.”


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