Rent charges of prime properties in Nairobi declined 10.3% in half year to December 2020 in what Knight Frank attributes to constraints triggered by coronavirus pandemic.
According to the firm, prime residential property rent market was hurt by oversupply, less disposable income due to the unfavourable economic climate, budget cuts from multinationals and fewer expatriates in the country as a significant number relocated back to their home countries in the first half of 2020 due to the pandemic.
The Africa Residential Dashboard Report further suggests that during the second half of the year, prime residential property sale price in Nairobi decreased by 3.9% in 2020, compared to 4% in 2019.
“This was mainly attributed to an increase in concessions over the second half of 2020 from developers and sellers who became more flexible and were willing to negotiate lower prices with potential buyers,” said Tilda Mwai, Knight Frank researcher for Africa.
The report further suggests that prime office rents in Nairobi declined by 13% during the second half of 2020 compared to the first half where the average occupancy rates across commercial offices recorded at approximately 72% in the same period.
However, absorption of Grade A and B office space increased by 13% in the second half of 2020 compared to the first half of 2020.
“This was attributed to the easing of lockdown measures and the gradual re-opening of businesses allowing multi-national and local occupiers to proceed with key business decisions and finalize transactions.”
This trend is expected to continue in the first half of 2021 with the expected rebound of the economy and COVID-19 vaccine roll out.
Knight Frank says prime residential market across Africa remained subdued in the second half of the year, declining 19% on average in the year to December 2020 on account of flight by expatriates, decline in disposable income and oversupply in some markets.
“Despite an overall slowdown in market activity due to the lockdowns imposed throughout the year, we have witnessed a gradual rebound in prime residential sales in majority of the markets.”