Knight Frank’s second half 2021 Kenya Market Update report has shown that prime residential sale prices in Nairobi marginally improved by 1.2% over the past 6 months to December. This is a 1.1% decline compared to a similar period in 2020, a growth attributed to re-opening of the economy and increased investment activity.
Over the review period prime commercial office rents increased from Ksh. 125 (USD 1.10) to Ksh. 136.38 (USD 1.20) per sq. ft. per month. However, the sector continues to be a tenant’s market due to the prevailing oversupply situation.
The report further unveiled that prime residential rents remained unchanged over the past 6 months to December 2021, compared to a 4.17% decline during the same period in 2020. The stability in rentals is mainly attributed to increased occupancies across most high-end gated properties. The prime residential sector remains a buyers’ and tenants’ market due to continued oversupply in most locations.
In the second half of 2021, a significant amount of office space was released into the Nairobi office market after completion of several Grade A office blocks in the capital. This includes the recently opened mixed use Global Trade Centre (GTC), whose office tower has circa 625,000 sq. ft. of lettable area.
In the second half of 2021, absorption of Grade A and B office space increased by 60% compared to the first half of 2021 as a result of pent-up demand from 2020. Players in the co-working space and those in financial services took up most of this space with average occupancy rates across commercial buildings at the end of the year improving to 78% from 73% in the 1st half of 2021.
Similarly, the retail sector saw a slight increase in prime retail rents in the second half of 2021, from Ksh. 454.6 (USD 4.00) per square foot (sq. ft.) per month to Ksh. 465.96 (USD 4.10) per sq. ft. per month. This was driven by increased demand for prime retail shops that are strategically located in developments. The period under review also saw supermarkets like Naivas, Chandarana, and Carrefour expand their retail footprint across the country. South African retailer Massmart also revealed its plan to sell its three stores in Kenya.
The 2nd half of 2021 saw foot and vehicular traffic increase in retail centres, which was attributed to the reopening of the economy. The holiday season also saw consumers going to malls to take advantage of seasonal retail offers.
Speaking at the report release, Ben Woodhams, Managing Director at Knight Frank Kenya said, “We are seeing a rebound in the residential market as there is now less uncertainty that had been brought about by the pandemic. We expect the prime residential sale and rental rates to remain stable in the first half of 2022 due to the favourable projected economic environment.”