Africa Market Pulse Survey Results

At Knight Frank we are committed to delivering substantive guidance and solutions to the challenges faced by our clients as a result of the COVID-19 pandemic and we continue to aggregate industry-specific data in order to assess the evolution of real estate markets in response to this global crisis.

We would like to thank our clients who participated in these surveys and are pleased to share the following survey results after gaining valuable market feedback from Office Landlords, Office Tenants and Retail Landlords & Tenants.

The full market report can be found here.

A summary of the key findings from the survey as well as our market outlook on the different sectors is provided below.

Office Landlords

• 40% of office leasing deals under negotiation at the onset of the pandemic face delays, while 30% are on hold. This indicates the extent of the impact of the pandemic on businesses.
• This immediate stress in the office market is further accentuated by the fact that only 20% of signed leases are proceeding as planned.
• 27% of respondents indicated that tenants had successfully requested rent deferrals while 33% had undertaken a renegotiation of lease terms on existing leases, with 40% of landlords stating they are likely to offer further concessions to maintain existing tenants and attract new ones.
• 50% of respondents are wary of the general uncertainty in the market, citing it as the greatest challenge to their real estate portfolios, followed by an apprehension that tenants may not be able to pay their rent (30%).
• 30% of the respondents indicated that the current pandemic would not deter them from investing in commercial office spaces in the future, while an equal 30% remain uncertain of the pandemic impact on their future investment decisions.
• As the continent braces itself to adapting to the new normal, an overwhelming 70% of the respondents have already adopted a post Covid re-Occupancy Strategy to ensure business continuity.

Office Tenants

• 76% of respondents have indicated that their organisations intend to implement social distancing policies upon resumption of business leading to reduced density in their offices.
• Opinion remains divided with regards to the types of workspace models to be adopted moving forward. 48% of the respondents strongly believe that organisations will consider moving away from the traditional real estate workspace model and implement flexible workspace policies more aggressively, while 43% believe that the type of workspace model adopted will vary for each organisation.
• While globally the accelerated adoption of remote working is expected to filter into normal work life after the resumption of business as usual, 48% of the respondents expect that 75% to 100% of their employees will return to work on a full-time basis. Subsequently only 19% of the respondents expect to reduce their amount of office space occupied.
• Going forward, while the pandemic is expected to lead to a new normal of remote working, the need for physical space in Africa remains dominant even as organisations embrace the values towards collaboration and flexibility.

Retail Landlords and Operators

• Fast food restaurants, healthcare related retail tenants and full-service restaurants are anticipated to be the quickest sectors to recover from Covid-19.
• Different accommodations were sought by retail tenants, with 31% reporting that rent holidays were requested, while 31% reported that a renegotiation of lease terms was requested. Further accommodations sought were short term renewals as well as rental payments on a turnover basis. This points not only to the financial stress the retail sector is under, but also the increasing flexibility in lease terms required by retail tenants in times of uncertainty.
• 61% of the respondents indicated that the disruption in supply chains as a result of lockdown measures had significantly impacted their ability to fulfil demand for products leading to additional financial stress.
• As a result of the crisis, retailers are expected to feel the brunt of the crisis more severely. As such, 40% of the respondents indicated they expected their H2 2020 forecasts to be impacted by over 75%.
• 51% of the respondents indicated that they had an online platform, with 80% of the businesses without an online presence already looking to adopt a platform.
• In addition to covid-19 respondents indicated that additional factors continue to exacerbate the stress on the sector in different countries such as currency devaluations impacting ability to pay rent and already subdued economies prior to covid-19 impacting consumer spending. These factors are expected to lead to a generally slowed down recovery of the sector post covid-19.
For full details on our Covid-19 Africa market pulse impact survey results please contact:

Tilda Mwai | Researcher - Africa