The East African regional real estate sector experienced a positive recovery in 2021 and continues with this momentum in 2022. Nairobi, Dar-es-Salaam, Kigali and Kampala, have all recorded a recovery in demand for office spaces, as employees begin to return to offices in earnest and demand returns to pre-pandemic levels. These gateway cities are showing signs of a gradual return in business confidence, which is expected to drive increased occupier activity throughout 2022.
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Speaking on the sidelines of the recently concluded 9th Annual East Africa Property Investment (EAPI) Summit held at the Villa Rosa Kempinski in Nairobi, Wayne Godwin, Head of East Africa and the Indian Ocean at JLL, a professional real estate services company, noted that with the industry dynamics shifting, decision-makers have the opportunity to plan their future real estate strategies based on a new set of increasingly resilient fundamentals.
Whereas most companies now have their employees working from the offices as was the case before the pandemic, most have adopted a hybrid working strategy. With their eyes set on reducing costs and making employees comfortable, most occupiers now view real estate as a strategic tool within their business, espousing their brand identity and critical to promote employee wellbeing.
“Similarly, emerging sub-sectors present a great investment opportunity, with the logistics sector riding on the back of demand for quality warehousing space spurred by drivers such as e-commerce, infrastructure development, and government industrialisation policies formulated to reinvigorate growth post-pandemic,” said Godwin.
During a panel discussion titled East Africa Real Estate Market Outlook, Shadrack Mella, Lead Valuer, East Africa, JLL said: “We are returning to fully working from offices as working from home fatigue is setting in. Another trend being witnessed is the evolution of retail, with growth in demand for neighborhood centers that are more convenient than traditional malls. We are also seeing significant investor appetite for living sectors, particularly affordable housing and student housing, underpinned by the region’s rapidly growing and urbanizing population.”
Data centres are another area in the keen focus of investors. To house data centres, a range of different real estate solutions are required, ranging from build-to-suit industrial units, repurposed industrial or office units, or even build-to-lease data centres. Cities such as Mombasa, located on sub-sea fibre links present an opportunity to establish a world-class network infrastructure. The recent enactment of the Data Protection Law in Kenya means that new data centres will need to be built to support this policy and the fourth industrial revolution in the region.
With a renewed focus on East Africa, JLL, a partner sponsor at the EAPI Summit, will continue to offer a combination of global expertise and research to the sector, while helping real estate investors access global and regional capital markets. JLL has been present in Africa since 2015, with a deep understanding of the local context and opportunities to contribute to the growth of East Africa through its real estate management and investment services, with a focus on commercial real estate.
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In the past three years, JLL has advised on $13 billion worth of potential real estate transactions and developments in East Africa and expects this to increase significantly as the market recovery continues.
“We are on the journey, with our clients, to embed sustainable design solutions and support clients with complex investment decisions. Tailoring our offer to meet your ambitions, our team of experts provides strategic advice and uses data-driven insights to determine practical solutions that deliver sustainable outcomes. We are optimistic and excited about the future in East Africa”, added Godwin.
Despite setbacks presented by the pandemic, the strong performance of asset classes such as data centres, industrial and logistics facilities, affordable and student housing along with the recovery of the hotel sector, present a very positive story for the region. In East Africa, the real estate sector can be leveraged to stabilise economies as the region rises from a debilitating pandemic.
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