Knight Frank Kenya on Tuesday released its property index report covering the second half 2015 in relation to the real estate market. The report analyses the office, residential, retail, hotel and tourism sectors, as well as industrial property and redevelopment land for the period July to December 2015.
Office Segment
This market reported reduced supply of prime Grade A offices which declined by 5% attributed to absorption of space in the niche in the second half, compared to the first half of 2015. A number of multinationals, particularly in the oil industry, expressed intention to downsize operations, and government agencies such as the Constitutional Commissions – which had been major takers of office space in the recent past – no longer require much space.
However, rents of Nairobi’s most expensive prime offices remained stable during period at US$21 per square metre per month, and were above asking rents for the overall market.
Residential Market
The residential market witnessed a slowdown in uptake, coupled with a rising supply, resulted in a marked decline in prime rents by 5.1% in 2015. However, contrary to the drop in asking rents, prices for top-end houses went up 2.9% in 2015 as poor performance of other investment classes such as investments in the stock market saw high net worth individuals seek alternative opportunities.
Shopping Malls
In the shopping centre market, prime retail rents remained unchanged in the second half at US$48/sqm/month. Absorption of formal retail space declined by 45% compared to the first half, largely because major retailers had already secured space in the upcoming developments.
Hotel & Tourism
In the hotel and tourism sector, several high-profile conventions lifted occupancy levels to over 80% during the holidays and conferencing weeks. The period also saw new entrants such as Radisson Blu open for business.
Undeveloped land
Demand for prime redevelopment land remained strong, with real estate agents closing major deals towards the end of the year. Notable transactions included a 1.1-acre parcel of land in Upper Hill that sold for over US$5 million.
