Residential Rents Relatively Stable Across Africa Despite Pandemic – Data
Residential rents remained relatively stable across the Africa region in the first half of 2020 despite the COVID-19 pandemic and subsequent lockdowns imposed.
This is according to Knight Frank’s pan-Africa Residential and Office Dashboards, of the 29 African cities tracked by Knight Frank, 60 percent 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 percent 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 percent over the first half of 2020 compared to a decline of 1.8 percent in the first half of 2019, pushing the annual decline to 5.1 percent 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 but enforced by the COVID-19 pandemic which has resulted in subdued demand in the prime residential sector.”
The report 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 Nairobi, occupancy rates on average were recorded at approximately 73 percent at the end of the first half of the year with higher levels recorded in certain prime 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 most locations and a drop in demand/requirements. “The current economic slowdown has resulted in a significant number of organisations and specifically multi-nationals putting on hold office space requirements The heightened safety regulations and increased focus on flexible working is causing a shift in operations as occupiers focus on operational rather than capital expenditure.”
Earlier in the year, Knight Frank noted that the majority of landlords across the continent had been pressed into granting their tenants rent deferrals/concessions while others have undertaken lease renegotiations to ensure tenant retention and attract new ones. These trends are expected to continue in the second half of 2020.