Victoria Mall in Entebbe had the highest footfall per square meter of gross leasable area of any mall in East Africa, at 41 people per square meter per month in the second half of 2018, a new report released by property consultancy firm, Knight Frank Uganda indicates.
The Kampala Market Update report by Knight Frank which was released Wednesday captures the performance in the real estate both commercial and residential in greater Kampala for the period June to December last year.
In the retail sector, the report points to significant growth especially June to December of last year attributed to openings of new anchors. Acacia Mall increased its footfall by 15 percent while Victoria Mall in Entebbe had the highest footfall per square meter of gross leasable area of any mall in East Africa, at 41 people per square meter per month.
Acacia is at 17 people per square meter per month.
Footfall refers to the number of people entering a shop or shopping area in a given time.
“Victoria Mall has shown footfall growth in excess of 109 percent per month establishing itself as the go-to venue for both consumers and retailers in the south eastern location of the Greater Kampala node,” states the report.
According to Knight Frank, the footfall registered in the period under review is attributed to Victoria Mall’s proximity to the Expressway, its open parking policy as well as the fact that Entebbe is a high growth area.
Victoria mall which is owned by Megha Industries (U) Ltd and managed by Knight Frank houses outlets for telcos, Nakumatt supermarket, KFC, Bata, Café Javas, BBROOD Bakery, Metropolitan Forex Bureau, AAR among other retailers.
Knight Frank forecasts even better footfall in the case of Village Mall (Bugolobi) where South African retail giant, Shoprite is set to open its fifth store in Uganda in the first quarter of this year.
Regarding residential stock, Knight Frank said prime residential suburbs of Kololo, Nakasero and Naguru registered a 5 percent decline from 86 percent occupancy rates to 81 percent.
This was driven by the fact that tenants opted for accommodation in other suburbs where rent fees are slightly lower and yet the quality of the stock available is newer and of similar if not better quality than is available in prime suburbs.
Other greater Kampala suburbs of Naalya, Najjera, Namugongo, Buwaate and Kitende supply of residential housing stock rose by 12 percent, but occupancy rates increased only 2 percent year-on-year.
New prime residential accommodation came onto the market 85 percent of which were apartment blocks. Knight Frank says that “this is exerting downward pressure of approximately 10 percent to 15 percent on rentals across the board in response”.
Average rents for prime two bedroom furnished apartments reduced from USD 2250 to USD 1,850 while rent for a similar apartment (unfurnished) dropped from USD 1,500 to USD 1,000.
“It is expected that approximately 150 housing units will come onto the market in the next 12 months in Kampala’s prime residential suburbs, of which 90 percent are 3 bed apartment units,” Knight Frank projects in its report released Wednesday.
Regarding commercial properties, Knight Frank reports that approximately 13,000 square meters of Grade A/AB office space in the core central business district (between Kampala road and Yusuf Lule road) and prime periphery areas (parts of Nakawa, Kololo, Bugolobi and Bukoto) was leased during the second half of 2018. This represents an increase by 2,000 square meters (18 percent) compared to the leased space in the same period in 2017.
Occupancy for Grade A and AB grew only by 2 percent full year, and yields for prime office remained stagnant at 10 percent to 11 percent.
In a bid to retain their tenants, landlords applied more flexible terms on leasing of the space both for new contracts and renewal of running ones. Knight Frank attributes the flexibility to the increasing supply of office space coming on the market.
“The current trend of corporate tenants and government parastatals moving into their own built to suit buildings will have an adverse effect on office space, by increasing the supply of vacant stock on the market in the short to mid-term,” says Knight Frank.
Research by the property consultancy indicates that there was increasing enquiries for retail space across various retail malls in general in Half 2 of 2018. The majority of enquiries were made by international based retailers specifically in the fashion sector.
The other entrant in the market in the first half of 2019 will be Afriexim Bank which is setting up its regional headquarters in Kampala.
Knight Frank says the completion of the ongoing road infrastructure projects around Kampala, along with the burgeoning middle class is expected to increase demand for home ownership particularly in areas surrounding greater Kampala.