Nairobi records highest rise in prime industrial rents, survey shows
Nairobi has emerged as the best performing market over the past three years in the prime industrial sector across Africa, recording the highest increase in rent (28 per cent) between 2018 and 2021, the latest Knight Frank Africa Industrial and Logistics Report shows.
It also recorded stellar growth in warehousing development with developers delivering over 170,000sqm of speculative prime warehousing over the last five years, with a further 400,000sqm expected by 2024.
Demand for good quality, large, modern facilities remains good with prime warehousing recording absorption rates of up to 80 per cent in H1 2021.
This demand continues to be fuelled by the agriculture, ecommerce and fast-moving consumer goods (FMCG) sectors and infrastructure developments.
“As a key regional hub, Nairobi’s position in driving East African trade cannot be underestimated.
With key infrastructure projects being delivered, we anticipate demand for best in class warehousing will continue to grow as this sector matures.
Although new projects were initially slow to lease, we have seen the sector gain momentum and best developments are being occupied, indicating emergence of a distinct two-tier market,” said Anthony Havelock, Head of Occupier Services and Commercial Agency, Knight Frank Kenya.
East African cities have remained top performers with prime rent in Nairobi and Kampala at Sh 600 (US$6 )and Dar Es Salaam at Sh700 (US$7) per sqm.
Across 29 African cities monitored by Knight Frank, a huge disparity in rent continues to exist largely driven by supply.
At Sh1,000 (US$10) and Sh 980 (US$9.80), per sqm, Kinshasa and Dakar respectively rank as the most expensive in Africa, while Blantyre at Sh250 (US$2.50) per sqm is the cheapest.
Luanda experienced the most substantial fall, currently at Sh550 (US$5.50) down from Sh1,000 (US&10) per sqm at the end of 2018.
“Appetite for industrial stock across Africa remains strong, with investors attracted to the sector’s strong income profile and positive market fundamentals such as rising urbanisation levels.
Nairobi is expected to continue driving this sector across the continent as evidenced by its growing development pipeline, high absorption rates and ease of doing business,” said Tilda Mwai, Senior Analyst- Africa, Knight Frank.