As the economy recovers from the effects of the Covid-19 pandemic, there has been recorded steadygrowth in occupancies for prime and office markets in Kampala. This is according the Knight Frank H1 2023 Kampala Market Performance Review and Outlook
The H1 2023 Kampala Market Review provides a detailed analysis and outlook into the performance of the Office, Residential, Retail, and Industrial property sectors from January – July 2023, against the country’s economic performance over the same period.
“As the economic landscape continues to recover from the sluggish performance of the last two years, the various real estate sectors within the Kampala property market have similarly exhibited marked resilience and improvement. The prime residential and office markets recorded steady growth in occupancies, while the retail sector exhibited improvements in footfall, turnover, and occupancies on a Y-o-Y comparison,” the market performance review reads in part.
The report also shows an upturn in general economic landscape fueled by recovery in sectors like Agriculture and resilience by the Services sector.
“The economic landscape witnessed an upturn in H1 2023, surpassing the lackluster performance of the previous two years. The resurgence was fueled by the commendable recovery in the Agricultural sector, and resilience exhibited by the Services sector. According to the preliminary annual GDP estimates by Uganda Bureau of Statistics (0UBOS), the economy expanded by 5.3% in the FY2022/2023, an improvement from the FY2021/22 rate of 4.6%. The Services sector remained the largest GDP contributor, accounting for 42.6%.”
The prime residential rental market exhibited marked resilience in H1 2023, despite a sluggish start to the year. Noteworthy was the substantial 8% rise in average prime monthly rents for 2- and 3-bedroom apartment units in the review period as compared to H1 2022, bringing the average rents to a level 3% below pre-COVID figures. Furthermore, there was a notable 6% increase in average prime occupancies compared to the same period last year, indicating a positive shift in occupier activity and overall market improvement.
Commercial leasing activity remained relatively stable in H1 2023, with modest improvements observed specifically in Grade A offices, as various occupiers continued to employ a more strategic
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approach to their space acquisition. The demand for office spaces was primarily driven by occupiers in NGOs, professional services, Industry & Logistics sectors, Medical Services, IT, Government, Oil
and gas, and Financial Services, who were either expanding, relocating, downsizing, or initiating new ventures. Flight to quality remains increasingly evident, driven by multinational occupiers’
requirements especially in the Nakasero and Kololo office markets where demand is strongest.
The implementation and promotion of various calendar events such as back-to-school, Easter, Eid, Valentine’s Day, Mother’s Day, and Father’s Day boosted the retail sector performance in the period
under review. Footfall figures experienced a notable increase of 13%, while general grocery retail turnover surged by 19%, and average occupancies demonstrated a 7% growth. Improvements in footfall, turnover, and occupancies further validate the optimistic outlook for sector recovery.
Industrial space inquiries remained stable, supported by demand from Fast-Moving Consumer Goods (FMCG), Agriculture, Telecoms, Manufacturing, Construction, Automotive, and Logistics industries. Warehouse leasing continued to dominate, especially in industrial areas within Kampala, driven by occupiers looking to expand their operations, and others looking to initiate new ventures.