Office occupancy across Africa has climbed from 60 percent in 2022 to 75 percent this year, according to Knight Frank’s biennial 2024/25 Africa Report. This recovery is attributed to the return to office spaces post-pandemic, with Kenya’s office occupancy rate now at 77 percent. The limited supply of prime offices, with only 617,000 sqm expected by the end of 2024, has kept take-up levels steady.
Mark Dunford, CEO of Knight Frank Kenya, highlighted the increasing demand for grade A offices with environmental, social, and governance (ESG) ratings. This trend is part of a global shift towards sustainable buildings, which not only contribute to reducing global carbon emissions but also attract and retain talent.
Developers are responding to this demand by refurbishing older buildings to meet ESG standards. This trend is evident as office landlords strive to maintain high demand and occupancy levels.
Knight Frank’s report also points out a shortage of true Grade A office supply, coupled with a limited development pipeline, presenting opportunities for developers. The co-working space sector is also gaining traction, particularly in South Africa, Nigeria, and Kenya. In Kenya, companies like Regus, Spaces, and Ikigai are expanding to meet the rising demand for flexible work environments.
In Zimbabwe, a shift from central business district (CBD) offices to suburban locations is driven by factors such as traffic congestion, deteriorating infrastructure, and high operational costs in central Harare. Consequently, office vacancy rates in CBD areas have risen to between 40-60 percent
Residential and Retail Sectors Show Mixed Trends
The residential sector is seeing a rise in mixed-use developments, driven by the ‘live-work-play’ model. This trend reduces commuting times and offers convenient retail access. However, affordability remains a concern for many households aspiring to own homes. Developers are addressing this with innovative financing options, complemented by government initiatives like Egypt’s ‘Housing for All’ scheme.
The luxury residential sector is facing rising construction costs, prompting landlords in markets like Nigeria to prefer dollar-denominated rents, leading to higher rental prices.
In the retail market, enhancing consumer experiences is a growing focus. Retailers are increasingly opening outlets in residential areas to meet the demand for convenience retail. In Cameroon, urbanization and a growing middle class are driving demand across various retail sub-sectors. Major cities like Douala and Yaoundé are becoming retail hubs, attracting both domestic and international retailers.
Industrial Sector Resilient Amidst Growing E-Commerce
Africa’s industrial sector is showing resilience, bolstered by government initiatives and the rise of e-commerce. Special Economic Zones (SEZ) and Export Processing Zones (EPZ) are creating new demand for efficient storage and distribution facilities. Significant developments include The Dube TradePort in South Africa and Dangote Industrial Park in Nigeria.
Government efforts to attract investment through incentives and infrastructure development have also contributed to the sector’s expansion. A prime example is the Kribi deep water port in Cameroon, which has received US$ 1.3 billion in investment since 2011.
Overall, Knight Frank’s report underscores the dynamic and evolving nature of Africa’s real estate markets, with significant opportunities and challenges across the office, residential, retail, and industrial sectors.