Fall in payable rent. There has been an increase in the supply of
three-bedroom house which seen a fall in payable rent. PHOTO BY EDGAR R
BATTE
Kampala- A report by Knight Frank has revealed that rent for three bedroom apartments has reduced due to increasing supply.
However, this is despite reports of an existing housing deficit that Uganda has been grappling with in over a decade now.
However, this is despite reports of an existing housing deficit that Uganda has been grappling with in over a decade now.
According
to the report, there is a surplus in supply of three bedroom
apartments, which has culminated into a reduction in rent prices.
“Knight Frank Research registered a 5 per cent decline in average rents for three-bedroom apartments from $2,900 (Shs10.6m) recorded in [first half of] 2018, down to $2,750 (Shs10.1m) in [first half of] 2019,” the report reads in part, attributing the fall to supply, which has outstripped demand.
“Knight Frank Research registered a 5 per cent decline in average rents for three-bedroom apartments from $2,900 (Shs10.6m) recorded in [first half of] 2018, down to $2,750 (Shs10.1m) in [first half of] 2019,” the report reads in part, attributing the fall to supply, which has outstripped demand.
However, an increase in expatriate
accommodation for singles and couples, for two bedroom units influenced a
7 per cent increase in rent prices from an average of $2,100 (Shs7.7m)
registered in first half of 2018 to $2,250(Shs8.2m) in first half of
2019.
Office space
Occupancy rates in Kampala office market experienced a 2 per cent growth attributable to grade B+ space, on the premise of a “soft” market, enabling customers to drive harder bargains for lower rental rates alongside good location, accessibility and ample parking.
However, addition of close to 18,000 square metres of grade A lettable space is a concern, especially for the occupancy rates in the second half of the year if not consumed by supply.
Occupancy rates in Kampala office market experienced a 2 per cent growth attributable to grade B+ space, on the premise of a “soft” market, enabling customers to drive harder bargains for lower rental rates alongside good location, accessibility and ample parking.
However, addition of close to 18,000 square metres of grade A lettable space is a concern, especially for the occupancy rates in the second half of the year if not consumed by supply.
“The addition of approximately 18,000
square metres of Grade A lettable space in first half of 2019 is
expected to have a negative impact on occupancy rates for Grade A space
in the second half of 2019 if existing supply is not [matched with]
demand,” Knight Frank noted.
The situation was exacerbated by an increase in grade A and B+ spaces in the second half of 2019 propelled by vacating government agencies and shift of multinationals into owner-occupied built to suit premises.
The situation was exacerbated by an increase in grade A and B+ spaces in the second half of 2019 propelled by vacating government agencies and shift of multinationals into owner-occupied built to suit premises.
The surge in
lettable space has distorted the market, essentially allowing customers
to further bargain leading to a 5 per cent -10 per cent decrease in
achievable rents.
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