Zambia

Uptick in the office leasing activity

The office market has experienced a steady rise in take-up, which has begun to chip away at the historic oversupply, especially in markets such as Lusaka. This has helped to lift occupancy levels by 7% over the last 12-months to 90% as at the end of March.

Some landlords are strategically adjusting lease rates to more affordable levels to further boost occupancy. This proactive approach has proven to be successful for many landlords.

Average monthly prime office rents have been relatively stable at c. US$ 18 psm for the third consecutive quarter.

The prime business node around the Addis Ababa roundabout remains the focal point of Lusaka's office market. Hosting the new head offices for Standard Chartered Bank, Liquid Telecom, and Citi Bank, this area continues to be the preferred office address.

Elsewhere, in response to evolving market demands, AfricaWorks and Regus are expanding their presence in Lusaka. Both firms have opened serviced offices in new locations, including the Mass Media area at the AGORA complex and the Arcades Mall area in The Sunshare Tower, spurred by rising demand for serviced office space.

Evolving retail landscape

Most retail leases in Zambia are denominated in US dollars, making retailers and landlords vulnerable to the effects of the kwacha’s depreciation. In 2023 alone, the kwacha lost 20% of its value against the US dollar.

Like elsewhere in the world, the retail landscape is undergoing a transformative shift towards experiential retail. Shopping malls are strategically redirecting their focus towards refining their tenant mixes and elevating overall consumer experiences.

Elsewhere, national infrastructure projects are paving the way for the future success of neighbourhood malls and standalone outlets in the underdeveloped northern and north-western regions, close to the borders of Tanzania and the Democratic Republic of the Congo, where formal retail is yet to reach its full potential.

New infrastructure projects poised to generate opportunities for warehousing

Over the past two years, the prime monthly lease rates for warehouses have remained steady at US$ 4-5 psm, largely due to the oversupply of warehousing.

Looking ahead the landscape of warehouse leasing is poised for change, driven by strategic road infrastructure projects such as the Lusaka to Ndola dual carriageway. This development is expected to generate new development opportunities for warehousing and commercial centres, particularly in areas where the road will detour and bypass towns such as Kabwe and Kapiri.

Furthermore, ongoing investment and projects in the mining and agriculture sectors across the country are expected to attract and stimulate new logistics developments, potentially reshaping the demand dynamic for warehousing.

Elsewhere, agricultural land is also in high demand. Zambia boasts c. 42 million hectares of arable land, yet only approximately 1.5 million hectares are cultivated annually.

Affordability key to unlocking housing potential

The residential sales market, currently valued at US$ 262.4bn (Statista) is characterised by a prevalence of self-build projects, reflecting the expanding middle-income segment of the population.

In contrast to the buoyancy in the sales market, prime lease rates have remained subdued and largely unchanged for the last three years.