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Supply of Apartments Up as Occupancy Declines in Upscale Suburbs

In its report analyzing the property market in the second half of 2019, Knight Frank says there was at least an 8.5 per cent year on year increase in the supply of apartment units coming onto the market. The biggest increment was noticed in the prime residential areas of Kololo, Nakasero, and Naguru.
property for rent in Butabika. Photo by Knight Frank Uganda
More apartments were built last year in the upscale suburbs of Kampala but owners found it tougher to fill them up, estate agent Knight Frank Uganda reports. 

In its report analyzing the property market in the second half of 2019, Knight Frank says there was at least an 8.5 per cent year on year increase in the supply of apartment units coming onto the market. The biggest increment was noticed in the prime residential areas of Kololo, Nakasero, and Naguru. 

But as more apartments came on the market, fewer people were able to pay for them. The agency says in the report that it registered a 9 per cent year on year average decline in occupancy for the same suburbs from 81 per cent recorded in half two of 2018 down to 72 per cent registered in half two of 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 said. 

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

Uganda Bureau of Statistics reported in the December property market index reported price increases in these two divisions. Meanwhile, Knight Frank noted a 3% year on year 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 sq. – particularly multi-nationals and large corporates. This could be an indicator most of the businesses are trying to cut on costs, with rent being one area they seek to cut first.

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.

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