The office market in Kenya will face a significant slowdown in second-quarter 2020 due to economic uncertainty and weakening business activity caused by the coronavirus pandemic, Knight Frank says.
Knight Frank Kenya says the coronavirus pandemic has caused unprecedented disruption in the economy, and the real estate sector has not been spared.
According to its Kenya Property Market Outlook, the sector witnessed a 68 percent decline in office space absorption in the 1st quarter of 2020, compared to the 4th Quarter of 2019, but a 60 percent increase compared to the 1st quarter of 2019.
They attribute this to completion on their activities before the close of the year and Q1 historically is a slow quarter for office takeup.
“Before the pandemic, we had witnessed a good level of enquiries both from international and local corporates, and transactions were underway. Corporates have since placed major decisions on “pause” whilst they assess their position.”
“We expect a significant slowdown in the absorption of office space in the 2nd Quarter of 2020 as organisations focus on handling the COVID-19 pandemic. This has already been manifested in the form of fewer office inquiries and postponement of key business decisions, causing a delay on imminent lease start dates.”
However, prime rents have remained stagnant attributed to the oversupply of commercial space in some locations and an unfavourable economic climate.