_Africa Offices and Industrial Market Dashboards: Q2 2022 Update August 17, 2022

Across the continent, the demand for office space is rebounding as businesses return to workplaces on a full-time basis. However, some international companies have permanently adopted hybrid working patterns; for instance, some businesses have reduced their office footprints, following right-sizing exercises in markets such as South Africa, Kenya, and Egypt.

Further details on the post-Covid real estate trends in Africa are detailed in our recently published Africa Report   

Another significant fall-out of the pandemic is the sharpened focus on best-in-class office space, which supports rental growth and high occupancy levels across many of the continent's prime office buildings, which remain in short supply in several markets.
Businesses are actively targeting higher quality space to mitigate against talent traction and retention challenges and meet increasing ESG considerations, which now appear largely confined to international businesses.

Despite this emerging stability, many countries are struggling with spiking inflation and repeated currency devaluations, which is, in turn, stalling economic recoveries and making some occupiers nervous about pursuing expansion plans. Moreover, the war in Ukraine is adding to economic woes, with global growth expected to slow from an estimated 6.1% last year to 3.6% in 2022 and 2023 (IMF).
Overall, prime office rents across all the 29 markets we track have held steady once more during Q2, the third consecutive quarter of stability.

Inadequate and poor infrastructure hinders full exploitation of the African industrial/logistical sector:
The industrial market has remained resilient across Africa, supported by different government initiatives to boost the sector. Some of these initiatives include a reduction in land acquisition costs and investments geared towards improving transport and energy infrastructure, as is the case in Egypt.

In general, inadequate, or poor transport and energy infrastructure continue to act as a significant drag on the expansion of the sector, particularly in countries such as Zambia and Zimbabwe.

Overall, the manufacturing sector continues to expand with recent commitments by major automotive manufacturers such as Peugeot and Renault in Morocco adding to the subsector's growth; however, there still appears to be a preference amongst African consumers for imported goods, which is to an extent holding back a more vigorous expansion in manufacturing activities.

Elsewhere, the logistics sector continues to enjoy heightened demand, as we highlighted in our 2022 Africa Report. Occupiers continue to gravitate towards high-quality warehouses, which remain in short supply. With limited stock options, developers rapidly mobilize around the continent, but a significant deficit remains.

On the investment front, the appetite for the industrial stock remains strong. Investors are attracted to the sector's strong income profile and positive market fundamentals, namely rising urbanisation levels, especially in South Africa, Kenya, and Egypt.

Government policies, infrastructure development, and the expansion of e-commerce are the primary growth drivers for the industrial sector across Africa. An apparent increase in competition for international investment has sparked a wave of new government industrial policies around the continent, which has also led to a boom in the number of special economic zones (SEZs).

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Mercy Gakii | PR And Communications Officer