UGANDA, Kampala | Real Muloodi News | According to the latest real estate market report published by Stanbic Properties Limited (SPL), the Kampala retail market faced a challenging period in the second half of 2022 due to the rising cost of living.
The report reveals a 10.6% year-on-year increase in headline inflation recorded in November 2022, compared to 2.6% registered in November 2021, according to Uganda Bureau of Statistics surveys.
The report notes that the shift to online consumption during the COVID-19 pandemic has come at the expense of physical retail, leading to landlords and retailers in prime malls experimenting with diverse tactics to lure consumers back to brick-and-mortar retail stores.
SPL’s Chief Executive, Spencer Sabiiti, stated that prime locations on the ground and first floors continued to be keenly sought after, with retailers taking advantage of tenant-favoured markets to secure more accommodative rents.
The report found that rents showed little or no noticeable movements since 2021, with the highest rents stagnating between USD 22 to 27/m²/month for prime retail space on lower floors and between USD 12 to 16/m²/month for large space occupiers on similar floors. However, the report anticipates a cautious expansion approach by retailers and developers as demand is expected to be relatively lethargic in the first half of 2023, with a recovery likely to pick up from the second half of 2023 onwards.
The report also anticipates an upsurge in the development of strip mall retail space, measuring up to 5,000 m² since they are easy to manage, typically requiring smaller shop sizes and lower upfront costs.
Beyond Kampala, the Wakiso and Mukono retail market weighted median retail rents decreased by 2.1% year on year from UGX 48,600/m2/month on the ground floor in December 2021 to UGX 47,580/m2/month recorded in December 2022. This is mainly attributed to the spillover effects of the high cost of living that wiped out the disposable incomes of predominantly middle-class consumers, with the biggest price movements registered in Entebbe and Kira municipalities at -10%.
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