Knight Frank Residential & Office Dashboards Record Decline in Rents In Major African Cities
Knight Frank has released the Africa Residential and Office Dashboards that provides occupiers, landlords, and investors with regular analysis of the rental performance and trends of prime residential and office markets across Africa.
The H1 2020 dashboards examined the residential and office market performance in 29 African cities during the COVID – 19 pandemic.
The Africa Residential Dashboard indicated that residential rents remained relatively stable across the Africa region in the first half of 2020 despite the COVID-19 pandemic and subsequent lockdowns imposed.
Of the 29 African cities tracked by Knight Frank, 60% recorded stable or increased rents over the first half of the year. Whilst physical viewings were restricted in the majority of the markets, a surge in virtual viewings was observed over the review period.
Lagos, Nigeria recorded the highest increase in prime residential rents a 38% increase from Q4 2019. This increase was attributed to the need for quality living spaces due to remote working offered by prime residential real estate.
Kenya’s average prime residential prices in Nairobi declined by 2.9% over the first half of 2020 compared to a decline of 1.8% in the first half of 2019, pushing the annual decline to 5.1% in the year to June.
The Residential Dashboard also forecasts that in the short to medium term, there may be a reduction in residential demand.
Tilda Mwai, Knight Frank Researcher for Africa says, “There has been a surge in the exit of expatriates from the continent due to pre-existing economic challenges and the COVID-19 pandemic has resulted in subdued demand in the prime residential sector. However, the need for quality living spaces due to remote working is anticipated to result in increased demand in this sector in the medium term.”
The dashboard also highlights that affordable housing demand persists, owing to the increasing number of young professionals in African cities and the need for space in the wake of the COVID-19 pandemic. As a result, renewed government interventions towards ensuring affordable housing delivery have been observed in countries such as Kenya and Nigeria.
In the Africa Office Dashboard, 29 of the cities tracked by Knight Frank recorded a decline in rents attributed to the ongoing pandemic and as a result, the office market performance remained subdued for the first half of the year.
In Kenya, occupancy rates on average were recorded at 73% at the end of the first half of the year with higher levels recorded in certain areas such as Westlands.
Anthony Havelock, Knight Frank Kenya Head of Agency says this has been attributed to the continued oversupply of commercial space in some locations. “The current economic slowdown has resulted in most of the organisations putting on hold office space requirements as the heightened safety regulations and increased agile working is causing a shift in operations as they focus on operational rather than capital expenditure.”
Earlier in the year, Knight Frank noted that a majority of the landlords across the continent resulted in granting their tenants rent deferrals while others have undertaken lease terms renegotiations to ensure tenant retention and attract new ones. These trends are expected to continue in the second half of 2020.
It was also noted that demand for serviced offices will decline in the short to medium term due to the financial stress on SMEs and start-ups as a result of the pandemic.
However, Anthony Havelock, Knight Frank Kenya Head of Agency explains that in the long term, there may be an increase in demand as occupiers will be more anchored towards flexibility and efficiency in space occupied.
For a more in-depth analysis read the results of the dashboard here:
Knight Frank Africa Residential Dashboard – https://bit.ly/2RcLLsE
Knight Frank Africa Office Dashboard – https://bit.ly/3ihOWeH
For additional information, please contact:
Cynthia Kimola, PR & Communications Officer, on email: cynthia.kimola@ke.knightfrank.com
Mobile: +254 723 174 143
