Knight Frank’s inaugural Africa Office Market Dashboard for Q1 2021 has revealed that the performance of office rents across Africa remains mixed. African cities have seen reduced office demand, which has been fueled by the economic effects of the ongoing COVID-19.
Occupancy levels unchanged at 70% in Q1 2021 same as Q4 2020. On the other hand office rental rates dropped marginally from Ksh. 140.08 ($1.3) per square foot (sq. ft) per month in Q1 2020 to Ksh. 120.68 ($1.12) per sq. ft per month in Q1 2021.
The Knight Frank’s 28-city composite index further revealed that prime office rents remained stable during Q1 2021. The index tracks office rental performance in some of Africa’s most prominent cities.
Commenting on the Dashboard findings, Anthony Havelock, Head of Agency, Knight Frank Kenya said, “Having started positively the Nairobi office market performance once again has been largely subdued owing to the lockdown restrictions imposed towards the end of Q1 which impacted negatively on market activity. There remains an oversupply of commercial space in most districts across the city which has given occupiers the upper hand in lease term negotiations and forced landlords/developers to be more flexible. Positively as the global vaccination rate has increased and with some lockdown measures improving, we are seeing multinational occupiers looking to re-occupy their spaces and relook at their strategies which in turn is leading to increased market activity.”
Tilda Mwai, Knight Frank Researcher for Africa explained, “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. On the other hand, 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.”
According to Knight Frank, Financial services and the technology sector have been the most notable sectors driving occupier demand mirroring trends in the global market.
In the future, Knight Frank anticipates that the prime office market across the continent will remain favourable to tenants throughout the year.