The value of the 32-storey Britam tower in Upper Hill has dropped by Sh1.13 billion due to low occupancy.
In its annual report, Britam Group said it reduced the value from Sh8.04 billion to Sh6.9 billion, due to the Covid-19 disruption, which has negatively affected the demand for office space, low rental yields and consequently revaluation losses depressing profitability.
According to the group, Britam Tower is currently at 47 per cent occupancy rate lower than the 98 per cent occupancy recorded by UAP-Old Mutual Tower.
“Over the past few years, the performance of commercial and residential real estate in Kenya has been negatively impacted by oversupply amid disappointing demand,” Britam says.
In reaction to the low occupancy, the firm says it will now stop new property developments and instead focus on property management to reduce its exposure to financial risks and lift performance.
The latest fall comes after the company made a record Sh9.1 billion net loss for the year ended December 2020.
Net losses from investment assets including rental income, fair value movements in investment assets, and investments in property funds Sh increased 97 per cent to 1.5 billion due to Sh2 billion revaluation losses.
According to the firm, the unfavourable operating environment adversely impacted their investment in associate – HF Group Plc – contributing to the Group results, a share of loss at Sh823 million and a reduction in the value of this investment by Sh603 million.
Since the entry of Covid-19 pandemic, companies have resulted to tend to work remotely to reduce the risk of contracting the virus.