Property owners count losses as occupancy declines in upscale suburbs

A property for rent in Butabika, Nakawa Division.

More apartments were built last year in the upscale suburbs of Kampala but owners find it tougher to attract tenants, a latest report by real estate firm, Knight Frank Uganda, shows.

In the report that analyses property market in the second half of 2019, Knight Frank says there was at least an 8.5 percent increase in the supply of apartment units in the market.

The biggest increment, according to the report, was in the prime residential areas of Kololo, Nakasero and Naguru.

However much as more apartments were constructed, fewer people and companies are able to afford them.

 The firm says in the report that there was a 9 percent average decline in occupancy of houses in the same suburbs from 81 percent in 2018 down to 72 percent in 2019.

“The increase in stock has forced some landlords particularly for the newer stock to discount their rents in order to be more competitive, allowing tenants who would have chosen to live in secondary suburbs,” the report reads in part.

The average rent decline last year in these posh suburbs was 1.3 percent. Even as posh suburbs had a glut of housing, Ugandans flocked none-elite areas like Kawempe and Rubaga division in search of affordable housing.

Uganda Bureau of Statistics, in their December Property Market Index reported housing price increases in the two divisions.

Meanwhile, Knight Frank said that there was a 3 percent decline in occupancy rates for prime office space. 

This is mainly on account of a 6 per cent decline in demand by large space occupiers - above 500 sqm – particularly multi-nationals and large corporates.

This could be an indicator that most of the businesses are trying to cut costs, with rent being one area they have focused, acoording to the report.

As a result, Knight Frank has observed a 4 per cent increase in leasing activity for smaller office occupiers (below 200sqm) particularly start-ups, who prefer flexible office terms and solutions including shared and serviced offices.