By John Kusolo
Knight Frank has officially released its highly anticipated H1 2024 Kampala Property Market Performance Review, providing a detailed analysis of the real estate sector's performance across Office, Residential, Retail, and Industrial property markets from January to July 2024. This comprehensive review also offers an informed outlook on the future trajectory of these sectors, set against the backdrop of Uganda’s economic performance, according to Hilary Mbaihayo, Research Analyst at Knight Frank.
*Economic Context*
The review is launched against the backdrop of an economy that has shown remarkable resilience and growth. Uganda’s economy expanded by 6% in the FY 2023/2024, with projections indicating an acceleration to between 6.4% and 7% in FY 2024/25. This marks a significant recovery, surpassing pre-COVID-19 growth rates and potentially leading the nation toward double-digit growth in the medium term.
Additionally, preliminary results from the 2024 national population census, conducted by the Uganda Bureau of Statistics (UBOS), revealed that Uganda's population has surged to 45.9 million, up from 34.6 million in 2014. This increase of 11.3 million people, representing a 2.9% annual growth rate, underscores the rapid demographic changes that will continue to impact the property market.
*Residential Property Market*
The prime residential market experienced a slowdown in H1 2024, marked by a low volume of sales and lettings. Occupancy levels saw a slight decline of 1% compared to H1 2023. The market's sluggish start in early 2024 persisted throughout the first half of the year, leading to a situation where supply outstripped demand, thus creating a buyer's market. This imbalance has kept pressure on prices and made the market more favorable for buyers, while sellers face challenges in moving properties.
*Commercial Office Sector*
The commercial office sector mirrored the trends seen in the residential market, with performance described as sluggish. The volume of sales and lettings was low compared to the same period in 2023. However, demand for prime office space remained stable, with net rents for Grade A and Grade AB properties recorded at $16.5 and $15.0 per square meter per month, respectively. Despite this, occupancy levels for these prime properties saw a slight decline, with vacancy rates increasing by 1% compared to H1 2023.
Demand for smaller office spaces, ranging from 50 to 150 square meters, persisted, driven by sectors such as IT/Telecom, retail, legal services, business and professional services, energy, industrial, and financial services. This indicates a continued preference for more flexible and cost-effective office solutions in the market.
*Retail Sector*
In contrast to the residential and office sectors, the retail sector recorded notable performance improvements in H1 2024. The sector benefited from a resilient economy, increased occupancy levels, and the entry of new players into the market. Existing retailers also expanded their presence, and strong product and tenant-mix offerings in various malls contributed to the sector's growth.
Retail performance was further bolstered by key events on the Retail Calendar, such as back-to-school seasons, Valentine’s Day, Easter, and Eid, which drove footfall and turnover. On an annual basis, retail turnovers surged by 30%, while footfall figures showed a 5% growth. Occupancy levels also increased by 3%, reflecting a positive outlook for the retail sector in the coming months.
*Industrial Sector*
The industrial sector in Uganda demonstrated robust growth in FY 2023/24, driven primarily by manufacturing, construction, and mining activities. The sector attracted significant Foreign Direct Investment (FDI) inflows, particularly in the oil and gas sector, agriculture, infrastructure, mining, and green projects. Notable investments include those in renewable energy and other green industrial projects, with companies like Nexus Green, 1MTN, and Sprouts of Water leading the charge. These projects attracted over $400 million in FDI during the fiscal year.
*Outlook for H2 2024*
Looking ahead, the outlook for the Kampala property market in H2 2024 remains optimistic, particularly for the retail sector. The anticipated improvement in economic activity, the launch of new stores, and the expected opening of an additional 1,606 square meters of retail space within various malls in Q4 2024 are all factors expected to support continued growth. The stability of the Ugandan Shilling and positive investor sentiments further contribute to this positive outlook.
While some sectors of the Kampala property market have faced challenges in the first half of 2024, the overall outlook remains cautiously optimistic. The continued resilience of the economy, coupled with strategic investments and demographic changes, are expected to drive growth across various property sectors in the near future.
About Knight Frank:
With over 125 years’ experience, Knight Frank
is the world’s leading independent real estate
consultancy. Through our alliance with the US
based Newmark Grubb Knight Frank, our
global network extends across over 500
offices in 60 countries handling more than £1
billion worth of prime commercial, residential,
retail and agricultural real estate per annum.
over the last 23 years Knight Frank Uganda’s
leading property consultancy firm has and
continues to offer unmatched consultancy and
advisory services in Property Agency,
Property Management, Valuation and
consultancy, and Research services in
Uganda. Knight Frank has consistently
maintained the highest standards of quality and
integrity in all that they do and has positively
impacted the market with well researched
property data led by a highly experienced team of professionals.
To download the full report, please visit: bit.ly/3YDdcQq
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