Knight Frank Property Report: Kampala’s prime office market to pick up, buoyed by oil and gas prospects

Kampala’s Prime office market is expected to increase as the performance of office rents across Africa remains mixed.

“Locations such as Kampala are expected to record a rise in occupier activity due to the recent signing of the East African crude oil pipeline project which we expect will drive up demand from the oil and gas sector in particular,” Tilda Mwai, Knight Frank Researcher for Africa says.

A Knight Frank’s inaugural Africa Office Market Dashboard for Q1 2021 says like most other regions around the world, African cities have seen diminished office demand, which has been exacerbated by the economic fallout as a result of the COVID-19 pandemic.

The Africa Office Market Dashboard details the performance of prime office markets in major cities across Africa.

According to Knight Frank’s 28-city composite index, which tracks office rental performance in some of Africa’s most prominent cities, prime office rents remained stable during Q1 2021, but were up 2% year on year.

In Uganda, Q1-2021 started off with an improvement in occupier demand as compared to the subdued performance recorded in Q4-2020.

The occupational and investor market in Q1 2021 saw a slight improvement, with general investor and occupier confidence returning compared to the previous quarters Q3 and Q4 2020, due to the rollout of the COVID-19 vaccine and anticipated signing of the Oil agreement, hence the increase in average rent. However, rents were still down by 3% compared to a year earlier, reflecting the negative impact of the pandemic on the general office market.

Downsizing, relocation to owner occupied premises and flexible working in terms of working from home and in shifts were major aspects that carried on into Q1-2021, as several organisations reconfigured their workplace layout and strategies to incorporate the SOP’s necessitated by the effects of the pandemic.

“Each market has continued to be impacted by unique factors beyond the pandemic such as currency fluctuations in South Africa, the political climate in Lusaka and a supply glut in Johannesburg and Cape Town. Elsewhere, markets such as Nairobi are anticipated to remain subdued owing to the lockdown restrictions imposed towards the end of Q1 which impacted negatively on market activity,” Tilda Mwai says.

Financial services and the technology sector have been the most notable sectors driving occupier demand mirroring trends in the global market, according to Knight Frank.

Looking ahead, Knight Frank anticipates that the prime office market across the continent will remain tenant favourable throughout 2021. Trends on consolidation of space and flight to quality are likely to continue as occupiers seek to leverage on the weaker market conditions to upgrade the space occupied.

The Africa Offices Dashboard report aims to provide occupiers, landlords and … of the rental performance and trends of prime office markets across Africa.