Capital Markets

Nairobi warehouse rents increase fastest in Africa

warehouse-pic

Autoport warehouse in Nairobi on Tuesday, August 11, 2020. PHOTO | DENNIS ONSONGO | NMG

Nairobi has recorded the fastest rise in rental yields for prime warehouses and industrial real estate in sub-Saharan Africa since 2018, driven by the country’s position as the regional trade hub and heavy investment in infrastructure.

Nairobi’s higher rental prices have been driven by higher demand for space from the agribusiness and fast-moving consumer goods segments, the latter partly due to the growing popularity of e-commerce retail platforms.

Property consultancy Knight Frank’s Africa logistics and industry review for the second half of 2021 shows that Nairobi’s average prime rents have risen to Sh667 ($6) per square metre, up from Sh522.4 ($4.70) in 2018.

“Despite most stock being built speculatively, absorption rates remain high, driven by the agriculture and FMCG sectors...average occupancy stands at 80 per cent. In comparison to pre-pandemic rates, Nairobi recorded the highest increase in average prime rents across Africa, from $4.70 per square metre in 2018 to $6,” said Knight Frank.

The city also accounts for 50 per cent of new space demand in Sub-Saharan Africa, the firm added, resulting in developers accelerating planned new projects to fill the demand.

They have put up 170,000 square metres of prime warehouse space in the last five years—largely on speculative basis—and are expected to add another 400,000 square metres by 2024.

BRIGHT SPOTS

The city is, however not the most expensive in Africa in warehouse rental prices, with the likes of Kinshasa and Dakar being costlier at Sh1,111.15 ($10) and Sh1,089.27 ($9.80) per square metre respectively.

On the other hand, Malawi’s capital Blantyre is the cheapest at Sh277.88 ($2.50) per square metre. Locally, warehouse and industrial space remains one of the few bright spots in the commercial real estate market.

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