Kampala’s real estate landscape is experiencing a notable surge in rental rates, with a significant uptick of up to 12% across various property segments, reveals a recent report by Knight Frank, a prominent property management firm. The increase is attributed to heightened economic activities in the region.
The H2 2023 report delves into the specifics, highlighting a remarkable 10% and 12% surge in Grade A and Grade AB office spaces, reaching USD 16.5 and USD 15 per square meter, respectively. Prime residential properties, particularly 2-bedroom apartments, have witnessed a 4% rise in average monthly rents, while 3-bedroom apartment rents increased by 1% year-on-year.
The industrial sector, buoyed by growth in automotive, manufacturing, interior design, pest control, pharmaceuticals, and beverages, maintains stable rental rates ranging between USD 3 to USD 7 per square meter for warehouse space. Interestingly, there is a notable shift in industrial players’ preferences towards purchasing their premises rather than renting, driven by factors like operational control and long-term growth plans.
The report underscores a general improvement in occupancy for Grade A and AB properties, with vacancy rates decreasing by 1%. Notably, there is a shift in demand, with tenants increasingly seeking smaller units under 200sqm, suggesting a departure from the previous trend driven by Foreign Direct Investments and the Oil and Gas sector’s demand for larger office spaces.
Core sectors such as consultancy services, NGOs, finance, health sciences, and IT remain robust, while newer entrants in the renewable energy sector and lottery companies are emerging. Furthermore, portfolio adjustments among clients are driving increased property sales for reasons such as portfolio optimization and capitalizing on property value appreciation.
Interestingly, 75% of inquiries prioritize renting over buying, reflecting a preference for flexibility in the dynamic market. The average selling and letting periods vary based on factors such as market demand, location, and property type.
For prime residential properties, standalone houses or those in gated communities remain the preferred accommodation type, though limited supply in prime suburbs has led to increased popularity in secondary residential areas.
Looking ahead, the report anticipates a surge in commuter towns on the outskirts of Kampala as attractive options for a quieter suburban lifestyle. Towns like Gayaza, Bulenga, Seeta, Kiwenda, Kiti, Nabbingo, Nabweru, Matugga, and Buwambo are witnessing increased interest due to more affordable land, potential for capital appreciation, improved amenities, and enhanced road infrastructure.
In the industrial sector, growth is expected to continue, driven by agro-processing, renewable energy, construction, cold storage, and technology sectors. However, challenges such as delays in certification processes by the Uganda National Bureau of Standards may impact new entrants in the coming months.
courtesy; the independent