Uganda
The prime residential and office markets in Uganda are experiencing rising demand, which is fuelling rental growth and occupancy levels. In the retail sector too, a similar trend is playing out.
3 minutes to read
A resilient residential rental market
Monthly prime rents for two-bedroom apartments in Kampala have grown by 4% over the last 12 months to US$2,100, while average prime rents across the market as a whole remained stable. The increase is in part due to rising demand from newly arrived expats. In turn, this has lifted average occupancy residential occupancy levels in Kampala to 84%, representing a 6% rise between H2 2022 and H2 2023.
Turning to the sales market in Kampala, demand remains robust for apartments priced at between US$ 150-200,000. The rising prices are prompting developers to enter the market and indeed, we are currently tracking 600 new residential units under construction and due to be delivered over the next two years. These developments are concentrated in sought-after areas such as Nakasero, Kololo, and Naguru.
Increased appetite for smaller offices
Monthly prime office rents (US$ 16.50 psm) have risen by 10% over the last 12-months, while grade B rents (US$ 15 psm) have experienced slightly stronger growth of 12% over the same period.
When it comes to demand, small offices (< 200 sqm) are rising in popularity and accounted for 47% of the requirements we registered during H2 2023. Business services (29.7%), NGOs (21.6%), the banking and finance sector (10.81%) accounted for 62.16% of all the new requirements our teams recorded in 2023.
Conversely, demand for larger offices (200-1,000 sqm) has fallen to just 29% of all new demand in H2 2023. 24% of the demand we recorded over the same period was for space in excess of 1,000 sqm.
Positive outlook for the retail sector
The retail landscape welcomed new entrants during H2 2023 further enriching the country's shopping experience. Notable additions include Strat Bridal and Oak Café at TMT Atrium, Krunchix at Metroplex Shopping Centre, Eden Gym at Village Mall, and The Patio, Myavanna, and Black Drip at Arena Mall.
Unsurprisingly, the arrival of the new tranche of international retailers has contributed the rise in overall occupancy levels, which have grown by 4% to 81% as at the end of 2023. While footfall declined by 5% during 2023, total turnover across stores in Kampala grew by 14% over the last 12-months, lifted by sales during the Black Friday and Festive periods.
Increased demand for best-in-class warehouses
The rising demand for industrial space is linked to business growth and an improved economic outlook. Indeed, GDP growth is expected to reach 6% during FY 2023/24, up from 5.2% last financial year.
The agro-processing, energy, construction, cold storage and tech sectors are the primary sources of new demand.
Monthly rents, however, have remained relatively stable at between US$ 3-7 psm, depending on size and location.
Notably, demand for space ranging from 300-1,000 sqm has risen, predominantly driven by businesses connected to the automotive, manufacturing, interior design, pest control, pharmaceuticals and beverages sectors.
In an effort to continue fostering demand in the sector, the government’s Special Economic Zones (SEZs) are playing a key role in attracting new occupiers. Four new free zones were created in the FY 2022/23 bringing the total number of free zones in the country to 35. The new free zones are into mineral processing, agro-processing, and ship assembly. The SEZs often boast developments that embrace ESG considerations and superior transport and utilities infrastructure, which further adds to their appeal.