The performance of Kenya’s commercial real estate is expected to experience a continued slowdown in 2021 with the COVID-19 pandemic, a report released on Tuesday says.
The report for July-December 2020 by the Architectural Association of Kenya (AAK) says the outlook for the commercial real estate sector is negative as the sector’s performance continues to be constrained by an oversupply of 6.3 million square feet of space as of 2020.
“The sector is also facing reduced demand as some firms downsize due to financial constraints while others embrace the working from home strategy amid the COVID-19 pandemic,” says the report.
The biannual report presents highlights in the real estate sector, tracking developments in land, financing, infrastructure, policy and legislation as well as developments in public sector infrastructure.
The findings show that the asking prices and rents for commercial property are also expected to decline as landlords continue giving discounts and concessions to attract and retain clients.
“We expect the COVID-19 pandemic to encourage many commercial real estate developers to reconsider or slow down new projects. This will reduce additional downward pressure on a market, which is already under immense stress,” the report said.
The review indicates that there is an existing oversupply of retail space estimated at two million square feet due to dwindling demand for physical space due to shifting focus to e-commerce,
“However, we remain optimistic that the retail sector’s performance will be cushioned by the continued expansion of local and international retail chains,” said the report. Enditem