The rising cost of rent in the Central Business District [CBD] of Kampala coupled with low consumer demand have affected the bottom line of a number of businesses, forcing them to relocate to the city's outskirts, major property managers reveal.

John Bigyemano, the Managing Director of Seven Hills, a real estate development & management company reveals to The Sunrise that many businesses have shifted or are contemplating shifting from the city centre (administratively known as Kampala Central) because of escalating rental charges on one hand and dismal sales on the other.

Bigyemano argues that over the past few years, major business centres such as Garden City and properties around Kampala road have increased their rental charges to as high as US$40 per square metre per month. This means that a mid-sized organisation such as a law firm or shop needs up to Ushs 3 to 4 million.  

Some of the businesses that have moved out include NBS-TV which shifted from Kampala Casino to Kamwokya. ZK Advertising also shifted from Workers House to Kololo. The World Health Organisation has also shifted to Kololo, again due to concerns over rent, parking fees and traffic jam.

Computer Point moved to Nakasero, while Appliance word Ltd moved from Jinja road to Old Port bell road near American Embassy and Industrial area respectively. New Vision's Marketing department also quit IPS building for industrial area.

The good thing though, as Bigyemano remarks, is that many plush buildings that have been erected in the suburbs such as Ntinda, Bukoto, Bugoloobi, Kyambogo, Naguru and Nammanve, are offering cheaper alternatives.

In such places, considered out-of-town locations or greater Kampala, a tenant can easily secure business space ranging between US $6 and US$ 13.

The situation has been further complicated by the slowdown in business partly as a result of the current global economic crisis that has affected consumer demand as well as hitting international organisations and NGOs.

"Most businesses, be it government or private now operate on tight budgets limiting the amount of money they can spend on rent," says Bigyemano.

His counterpart, Brian Tadaruka, the Head of Commercial Agency at Knight Frank, another reputable real estate company, agrees that rising cost of rent is forcing businesses to look outward into the suburbs.

Tadaruka also laments the lack of parking space in CBD as seriously having a negative effect by turning away potential customers.

"Property managers [in central Kampala] charge their tenants premium parking fees while at the same time, their clients get inconvenienced by Multiplex parking system with its inefficient parking meters," adds Tadaruka.

Tadaruka argues: "An office outside the city centre is free from noise, buildings have enough space and the environment is generally quiet, which is ideal for conducting business."

Bigyemano laments too:  "The city centre is associated with congestion traffic jam, accidents and exhaustion."

Balancing cheaper rent with fewer customers

For businesses that rely on sales, the decision to shift undoubtedly comes after some hard thought, much less for NGOs.

But according to people like Tadaruka, high costs, means that businesses are left with fewer alternatives. They either do with fewer customers and cut on costs or close shop.
Luckily still, the more offices and businesses have moved out of town, the more people and other businesses have followed suit, t appears.

For instance, a number of major banks now have branches in the suburbs, which makes transacting business easier. Improved road networks and secure environments means that people can safely work with few worries.

Anthony Wanyoto, the Managing Director ZK Advertising, which used to pay US$ 32 per square metre at Workers House now relishes the fact that they enjoy a greener neighborhood while at the same time spend what he calls a friendly rate for their Kololo home than they used to.

"We are actually getting fresh air; we have enough parking for both staff and clients, which was not the case where we used to rent as we paid parking fees on top of the expensive rent," Wanyoto says.

But when compared to other capitals however, Kampala is heavily congested and expensive. While some strides have been made in improving roads, it is evident that if more work was to be done on extending good roads that linking the city centre to suburbs, many outlying areas would benefit from even greater investments that would subsequently help lower rent further and develop the city.

For now though, the outward movement pf businesses, good as it may seem remains unplanned. blog comments powered by Disqus

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