UGANDA, Kampala | Real Muloodi News | Broll Property Group presented its highly anticipated market outlook at the eighth annual East Africa Property Investment (EAPI) Summit earlier this month. Moses Lutalo, Managing Director of Broll Uganda, delivered the presentation at the thought leadership event, focusing on Kenya, Tanzania and Uganda.
The demand for commercial office space in all the three countries has been down in the past 12 months, said Mr Lutalo. Businesses reduced borrowing and overheads in the first quarter of 2021 by downsizing or prioritising office space because of the pandemic.
In Kenya, the outlook for the next 6 to 12 months, according to Mr Lutalo, will see prime rent for office space range between US$10 – $11 per square metre per month, with 7.5% yields (down from 8%). He expects prime retail rent to range between US$40 – $44, with 7% yields (down from 14%). Kenya has seen an oversupply in both asset classes, Mr Lutalo explained.
Meanwhile, in Tanzania, the outlook for the short to medium term will see prime office rent range between US$15 and $16 per square metre per month, with 9% yields. Prime retail rent over this time frame is expected to range between US$20 – $25, with 7% yields (down from 8%), he said.
Whereas in Uganda, office space prime rent is forecast to range between $15 and $16 per square metre per month over the next 6 to 12 months, with 9% yields. Prime retail rent is expected to hold steady and range between US$25-$30 per month, with 12% yields.
Speaking about Uganda entering the second lockdown on 18th June, Mr Lutalo said “We had started seeing activity within the commercial office space, retail and residential, mainly on the back of key partner agreements being signed for oil and gas pipeline development.” However, he noted that COVID-19 related lockdown measures would slow down this growth.
He went on to explain that even though the pandemic disrupted the real estate industry, he believes opportunities still exist, especially in the area of facilities management.
Further, Mr Lutalo emphasised that Broll has been an active player in providing risk management, facilities management, and real estate services to oil and gas players.
Speaking about what the future holds for the East African real estate sector, Mr Lutalo explained:
“The entry of new and more sophisticated investors within the real-estate sector, means all players have to scale up their offering and invest in proptech, especially, if they are to remain relevant and create real value for their clients, particularly those in the property and facilities management space, retail leasing and management.”
Expectations of When the Market Will Start Picking up for the Key Asset Classes:
- Office Prime Rent – Different markets will respond differently. Still, from an East African perspective, Uganda is likely to pick up first given the demand for oil and gas, followed by Tanzania. Kenya is already in oversupply.
- Retail Prime Rent – Kenya retail rents are likely to hold in the short to medium term, while in Uganda, there is likely to be a drop in the prime asking rents. Tanzania will continue to lag when it comes to retail rentals.
- Warehouse/Logistics Rent – Kenya is likely to pick up faster than Uganda and Tanzania mainly because of GDP and the fiscal and monetary policies to stimulate SMEs’ growth.
- Hospitality – Tanzania is likely to pick faster than Kenya and Uganda. Still, all this will depend on the ability of Tanzania to carry out a mass vaccination exercise of the population against COVID-19. Of the three countries, Kenya seems to be taking the lead on vaccination, making it a more desirable destination than Tanzania from a risk perspective.
What is PropTech?
In an exclusive interview with Real Muloodi News Network, Mr Moses Lutalo explained that proptech, in simple terms, refers to technology that aids or improves the way we do property. How you access, visit, value, acquire, develop, manage and dispose of property requires technology in whatever form, he explains. Specialisation has become the new normal for real estate, drawing investors to different markets for various reasons. This will continue to be primarily driven by technology.
Technology is affecting all property types, most obviously retail and industrial. Property and asset managers are turning to technology solutions for productivity enhancements and improved operational efficiency, says Mr Lutalo.
Technology requirements would differ from customer to customer. If you are an investor of space, you might be inclined towards development and asset management learning technology. Still, if you are an occupier of space, you might be interested in space optimization, facilities management, occupation and sustainability technology.
“That said, the pandemic has opened our Group to other service lines like Broll Risk Management and Internal Developers, which we believe would spur our service offerings into the future,” Mr Lutalo concluded.
How Broll has Adapted Since the Pandemic, and How its Service Offerings Changed
Broll has been affected by the pandemic just like any other business, said Mr Lutalo. Playing within the real estate service space where sectors like hospitality and retail have been the worst hit means that the Broll business gets affected.
“What has, however, kept us afloat is the strategic view the Group took to invest in cloud services to host our Broll online Integrated Property and Facilities Management platform. This meant that we could offer seamless services to our customers regardless of where we are located. The pandemic just accelerated our continued investment in technology, which has enabled us to create real value for our clients through efficiencies which is a competitive advantage for Broll,” Mr Moses Lutalo says.
Using PropTech, property and facilities management business enables clients to access services such as invoicing for utilities, rent and operating costs via the tenant module. At the same time, landlords can get their reports in real-time via the landlord portal of the Broll online platform.
About Broll Property Group
Broll Property Group Ltd has a presence in over 16 countries, with operations across 13 countries in Africa and 2,000+ personnel.
Broll Uganda has been active in the Ugandan real estate market for over five years. The Ugandan Office is well-established in Kampala, and the team consists of local market experts who are skilled at designing and delivering solutions to property owners and tenants. It has excelled at property management, broking, retail leasing, and facilities management.
Additionally, Broll Uganda provides advisory and consultancy services. The company is also a longtime supporter and sponsor of EAPI, the leading platform in African real estate.
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