Tanzania Market Update - Knight Frank
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Tanzania
knightfrank.com/research
Market Update
H2 20 2 0Tanzania
Market Update
H2 2020
Key Highlights
Inflation Rate, Total Consumer Spending
Consumer Spending Series2
Inflation(RHS)
The Central Bank has highlighted that
16 9.0
Tanzania’s economy demonstrated
14 8.0
satisfactory performance, amidst
7.0
Annual % Change
12
negative impact of COVID-19 on
6.0
some sectors that were exposed to 10
5.0
external shocks. 8
4.0
6
3.0
During the first three quarters of 2020,
4
growth averaged 4.7% compared to 2.0
2 1.0
7.3% in the previous year and 6.9 %
in 2018. 0 0.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Inflation remained low in the fourth Source: IMF, Knight Frank Research
quarter of 2020 at 3.1%.
IMF AFRREO, Estimate, Constant Prices, Change P/P
Dar es Salaam’s prime office rents Sub-Saharan Africa Tanzania (RHS)
8.0 9.0
were recorded at US$15 during the
8.0
period under review. 6.0
7.0
4.0 6.0
Dodoma’s prime office rents were
5.0
recorded at between US$ 12 and US$ 2.0
4.0
%
14 during the period under review. 0.0 3.0
2.0
-2.0
The residential sector is expected to 1.0
remain subdued in 2021 -4.0 0.0
Source: Knight Frank Research, MacrobondMacro-Economic Analysis Office Market
Economic growth declined during the Further, according to the BOT, inflation Dar es Salaam’s office market continues
last quarter of the year compared to remained low in the fourth quarter of to be over supplied. Further, as a result
a year earlier according to Bank of 2020, bolstered by subdued prices of of the pandemic, demand for prime
Tanzania(BOT). This slowdown in both food and non-food consumer office space declined following on
growth was attributed to the impact goods and services. measures adopted by most corporate
of COVID-19 on the economy . Specifically, headline inflation was institutions predominantly financial
However, despite this decline, recorded at 3.1% compared to 3.7% a institutions to limit the spread of
Tanzania continues to feature year earlier. pandemic.
amongst the top ten fastest growing This rate was within the target range of
countries in the continent. between 3% and 5% for 2020/21 across Notably, as a result of the pandemic,
the regional (EAC and SADC) some of the banks in the market have
` convergence benchmarks.. shifted a large portion of their corporate
activities online, making use of software
such as: Microsoft Teams; Skype;
Dar es Salaam Prime Office Rents Zoom and Video Conferences to hold
their virtual meetings and conferences.
This trend is anticipated to remain rife
18
even after the pandemic.
16
In the period under review, prime office
14
rents were recorded at US$15 despite
12
concession requests from tenants.
US$/SQM /MONTH
10
On the other hand, Dodoma’s office
8
market continued to be vibrant during
6 the period under review with occupancy
rates averaging above 90% as a result
4
of government institutions occupying
2 majority of the buildings. Further prime
0 office rents were recorded at between
US$12 and US$14 during the period
under review.
Source: Knight Frank Research In the medium to long term, we
Source: Knight Frank Research anticipate Dodoma’s office market will
be oversupplied due to completion of
several government’s projects currently
in the pipeline and government’s
preference towards owner occupier
arrangement.Residential Market due to supply chain disruptions and decline prospective growth. Rents have
Dar es Salaam’s prime residential in household income as a result of the continued to vary depending on location,
market was already subdued pre- pandemic. Average prime retail rents size and facilities available such as
pandemic, with the pandemic period declined to US$13 per square metre per Generators, AC with designated
resulting in a further decline in rents month during the period under review from industrial areas attaining higher rates
due to subdued demand. This was US$ 17 per square metre per month in compared to other areas.
attributed to the flight by expatriates 2019. Overall, in the period under review
from the country, oversupply of prime Zanzibar has continued to lead as the industrial rents on average ranged
residential developments and the emerging market for the formal retail between US$1 and US$8 per sqm per
general impact of the pandemic on premises in Tanzania with Michenzani Mall month.
household income. as their flagship mall that opened in October
2020. Outlook H1 2021
Dar es Salaam Prime Macro-Economic
Select Retail Development Pipeline
Residential Rents
The central bank projects that the
Projects
2-bed apartment
economy’s will grow by 6% on average
3-bed apartment Name Location Proposed
4-bed apartment sqm in 2021.
Dar City Corner of 45,500
6,000
Office Market
Shopping Bagamoyo
Centre Road and Mwai Dar es Salaam’s office market is
5,000
Kibaki Road
Peninsula Masaki, Along 31,000 anticipated to remain a tenant’s market
4,000
Plaza Haile Sellasie with increased requests for lease
US$/Month
3,000
Road
Mak Off Tarmacked 15,000 concessions.
Shopping Sala Road,
2,000 However, Dodoma’s office market is
Centre Mbezi Beach
1,000 Area anticipated to remain stable in the
The Mall Mbezi Beach 15,300-
0 at Mbezi Area, Along Phase I short term but expected to be subdued
2018 2019 2020 Bagamoyo in the long term due to the
Road
Source: Knight Frank Research Government’s initiatives to shift to
Industrial Market
owner occupied buildings
Over the past five years the industrial sector
Retail Market
has continued to grow as a result of Residential Market
The formal retail sector in Tanzania
government led initiatives in the
Although, we anticipate the market to
remains undersupplied. However,
manufacturing, processing and assembling
remain subdued there has been an
there has been increased interest
industries. In the period under review, a total
increase in demand for prime
from international retailers due to the
of 8,477 new industries of large, medium
properties.
growing prospects in the sector with
and small categories were established
some of the major retail brands
according to Bank of Tanzania. Retail Market
debuting in the market. These have
This growth has led to increase in the The sector is anticipated to record
included Home, KFC, Subway, Game
supply of locally manufactured goods. increased international retailers interest
and Mr. Price.
However, Dar es Salaam’s industrial market in 2021 due to the growing opportunities
During the period under review, the
has remained subdued in light of this in the sector.
sector suffered significant setbackPlease get in touch with us
Ahaad Meskiri Arafa Ahmed
Managing Director Mnaina Msafiri
Head – Valuation & advisory
+255 713339354
ahaad.meskiri@tz.knightfrank.com +255 713044243 Manager - OSCA
arafa.ahmed@tz.knightfrank.com +255 717145273
Meja Elisha Othman Jumbe mnaina.msafiri@tz.knightfrank.com
Head – Property Management Head – Agency
+255 713185859 +255 784251447
meja.elisha@tz.knightfrank.com othman.jumbe@tz.knightfrank.com
Julius Mvaa Safia Khalfan
Head- Commercial Agency Retail Manager
+255 653621387 +255 713283430
julius.mvaa@tz.knightfrank.com safia.khalfan@tz.knightfrank.com
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