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Knight Frank expects more than 100,000 square metres of new Grade A office space to enter the market in the second half of 2025
Kampala, Uganda | THE INDEPENDENT | Uganda’s commercial and residential property markets are entering a tenant-favourable phase as supply continues to outpace demand, according to property management firm Knight Frank.
While rents have remained broadly stable, occupancy rates across offices, residential apartments, and retail malls have softened, reflecting shifting tenant preferences, macroeconomic pressures, and the completion of major projects.
In Kampala’s office sector, prime rents held steady in the first half of 2025. Grade A office space averaged $16.5 per square metre per month, while Grade AB offices commanded $15, similar to H1 2024. Occupancy, however, fell: Grade A dropped to 85% from 89.8% a year earlier, and Grade AB to 82.3% from 84%.
Knight Frank attributed the decline to business downsizing, the completion of NGO- and government-funded projects, tenant relocations between office grades, and a shift from the central business district to suburban areas. Other factors included increased owner-occupation through sectional purchases, consolidation of government agencies into parent ministries, and saturation in certain Grade A segments.
Large tenants, typically occupying more than 1,000 square metres, have moved from older Grade AB buildings to newly completed Grade A offices, putting additional pressure on vacancy rates. “Landlords of Grade AB properties are undertaking renovations and enhancing services to attract and retain tenants,” Knight Frank said. The firm added that demand is growing for smaller, flexible office spaces and condominium-style offices, signalling a niche trend in Kampala’s market.
100,000 square metres of office space
Knight Frank expects more than 100,000 square metres of new Grade A office space to enter the market in the second half of 2025. The firm advised landlords to focus on tenant-centric strategies, improve property quality, and diversify their tenant base beyond NGOs and expatriates to include SMEs and professional services. Suburban offices were highlighted as key growth areas.
Residential property has faced similar pressures. Prime apartment rents remained stable or declined slightly in H1 2025. Two-bedroom units fell 7%, driven by increased inventory and tenant price sensitivity, while three-bedroom units remained unchanged for the third consecutive period.
Tenant composition is shifting. Demand from Western expatriates, particularly those linked to NGOs and diplomatic missions, has weakened due to global redeployments and funding cuts, including from USAID. This has affected prime locations such as Kololo, Nakasero, and Naguru.
Conversely, demand from Asian expatriates, notably professionals from China and South Korea involved in infrastructure and corporate projects, has risen, with many preferring modern apartments in secondary neighbourhoods near business parks and industrial zones.
Landlords response
Landlords have responded by offering contemporary, amenity-rich units at more competitive rates to attract evolving tenant profiles. Overall, prime residential occupancy fell to 80% in H1 2025, down from 82% in H1 2023. Some secondary locations, however, recorded rental growth and improved occupancy.
Retail real estate has remained comparatively resilient. Occupancy in Knight Frank-managed malls stayed above 85%, though growth slowed to around 2% year-on-year, compared with 11% in H1 2024. Analysts say prime retail space is approaching saturation, prompting operators to focus on tenant upliftment and consumer engagement.
Kampala’s industrial sector also remained stable. Warehouse rents ranged between $3 and $7 per square metre per month, with occupancy consistently above 80%. Small to mid-sized units of 300–1,000 square metres recorded the highest absorption, driven by agro-processing, coffee export, and fast-moving consumer goods companies, while demand for larger units remained subdued.
Knight Frank said Kampala’s property market is entering a tenant-favourable cycle, prompting landlords to offer flexible leases, improved services, and diversified product offerings to sustain occupancy and protect yields.
