Global property agency and consultancy company Knight Frank continues to deliver substantive guidance and solutions to the challenges faced by its clients as a result of the global Covid-19 pandemic and aggregating industry-specific data in order to assess the evolution of real estate markets in response to this global crisis across Africa.

Knight Frank carried out surveys to obtain valuable market feedback from Office Landlords, Office Tenants and Retail Landlords & Operators in the nine key countries Knight Frank operates in.

A summary of the survey key findings, as well as their market sector outlooks are provided below.

Office Landlords

  • 40% of office leasing deals under negotiation at the onset of the pandemic face delays, while 30% are on hold. This indicates the extent of the impact of the pandemic on businesses.
  • This immediate stress in the office market is further accentuated by the fact that only 20% of signed leases are proceeding as planned.
  • 27% of respondents indicated that tenants had successfully requested rent deferrals while 33% had undertaken a renegotiation of lease terms on existing leases, with 40% of landlords stating they are likely to offer further concessions to maintain existing tenants and attract new ones.
  • 50% of respondents are wary of the general uncertainty in the market, citing it as the greatest challenge to their real estate portfolios, followed by an apprehension that tenants may not be able to pay their rent (30%).
  • 30% of the respondents indicated that the current pandemic would not deter them from investing in commercial office spaces in the future, while an equal 30% remain uncertain of the pandemic impact on their future investment decisions.
  • As the continent braces itself to adapting to the new normal, an overwhelming 70% of the respondents have already adopted a post Covid re-Occupancy Strategy to ensure business continuity.

Office Tenants

  • 76% of respondents have indicated that their organisations intend to implement social distancing policies upon resumption of business leading to reduced density in their offices. 
  • Opinion remains divided with regards to the types of workspace models to be adopted moving forward. 48% of the respondents strongly believe that organisations will consider moving away from the traditional real estate workspace model and implement flexible workspace policies more aggressively, while 43% believe that the type of workspace model adopted will vary for each organisation.
  • While globally the accelerated adoption of remote working is expected to filter into normal work life after the resumption of business as usual, 48% of the respondents expect that 75% to 100% of their employees will return to work on a full-time basis. Subsequently only 19% of the respondents expect to reduce their amount of office space occupied.
  • Going forward, while the pandemic is expected to lead to a new normal of remote working, the need for physical space in Africa remains dominant even as organisations embrace the values towards collaboration and flexibility.

Tilda Mwai, Researcher - Africa, Knight Frank stated: "The current crisis has introduced a new dynamic for all types of corporate occupiers, from multinationals to corporate occupiers in Africa. While we are unlikely to witness an extreme shift to remote working, flexibility and collaboration are going to be core values to any organisation going forward.

In the short to medium term we will probably see a change in office layouts and design, as the overall employee density remains low, in line with the pandemic’s containment measures across different countries. In the long-run, we see the utilisation of the office premises as collaborative spaces, where talent retention and health and wellness for employees will be a key aspect of the new office-as-a-service for corporates".

Retail Landlords and Operators

  • Fast food restaurants, healthcare related retail tenants and full-service restaurants are anticipated to be the quickest sectors to recover from Covid-19.
  • Different accommodations were sought by retail tenants, with 31% reporting that rent holidays were requested, while 31% reported that a renegotiation of lease terms was requested. Further accommodations sought were short term renewals as well as rental payments on a turnover basis. This points not only to the financial stress the retail sector is under, but also the increasing flexibility in lease terms required by retail tenants in times of uncertainty.
  • 61% of the respondents indicated that the disruption in supply chains as a result of lockdown measures had significantly impacted their ability to fulfil demand for products leading to additional financial stress.
  • As a result of the crisis, retailers are expected to feel the brunt of the crisis more severely. As such, 40% of the respondents indicated they expected their H2 2020 forecasts to be impacted by over 75%.
  • 51% of the respondents indicated that they had an online platform, with 80% of the businesses without an online presence already looking to adopt a platform.
  • In addition to covid-19 respondents indicated that additional factors continue to exacerbate the stress on the sector in different countries such as currency devaluations impacting ability to pay rent and already subdued economies prior to covid-19 impacting consumer spending. These factors are expected to lead to a generally slowed down recovery of the sector post covid-19.

Marc Du’Toit, Head of Retail notes: “Africa’s retail performance has previously remained fragmented across different markets. As a result of the current pandemic, the retail sector in general is expected to remain under pressure in the short to medium term. In the long run, we expect the market will rebound as the various retail markets formalise. Therefore, moving forward, it is expected that more flexible lease terms and potential revenue sharing arrangements may be requested by retail tenants, as they seek to hedge themselves in the event of similar crises.

For all media & PR enquiries, please contact:
Thomas Farmer,
E: Thomas.Farmer@me.knightfrank.com 

Send us your press releases to pressrelease.zawya@refinitiv.com

© Press Release 2020

Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.

The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.

To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.