High end property prices tapering, Knight Frank report shows
Kenya is expected to experience an office supply glut in 2017 as more developers construct office blocks.
According to the Knight Frank Global Cities Index, over three million square feet of office space will be available from next year, at a time organizations are scaling back on expansion.
Knight Frank Kenya Managing Director Ben Woodhmas said this has seen rent and lease prices drop as organizations search for cheaper alternatives.
“The prime property segment is undergoing a normal property cycle. The pressure on rents is largely due to the current oversupply in the market. For buyers, long term capital gains continue to be attractive as values have increased by as much as 40 percent over the past five years,” Mr Woodhams said.
In retail segment, asking rents have remained unchanged since 2014 as more shopping centre developments come into the market.
The report shows that the widening variety of retail developments has attracted international brands such as Foschini and Carrefour, promising an upscale experience for shoppers in malls.
In industrial property, scarcity of high quality logistics and warehousing space, particularly in Nairobi, has created opportunities for development.
Sophisticated occupiers in this segment require purpose-built facilities of high specifications to support modern manufacturing, storage and distribution processes.
It is anticipated that prospects in the high-end property market will improve significantly after next year’s general election, helped by faster GDP growth and improving global oil prices that could spur local exploration and production.
Available data shows key indicators such as cement production and consumption, and the value of approved building plans, improved significantly in the first eight months of the year.
“Cement consumption has risen in tandem with production due to the ongoing construction projects in real estate and infrastructure,” Mr Woodhams said.
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