The rental prices for prime office space in Kigali have fallen by 20 per cent as supply increases and demand remains at flat line.
According to global property service firm Knight Frank Africa’s report for 2017, prices have dropped from an average of Rwf20,986 ($25) per square metre in 2015 to Rwf16,792 ($20) per square metre in 2017.
Supply has increased rapidly in the past couple of years and future developments could add another 50,000sq metres by 2021, according to Kefa Angwenyi, a lecturer with the department of architecture at the University of Rwanda.
Mr Angwenyi, who is also a property developer, said the rapid build up of office space was forcing developers to find ways of delivering space at more affordable rates.
He added that developers cannot reduce the rent price of office space beyond a certain amount and current purchasing power in the private sector for office space has dropped.
“The economy will have to pick up to create demand. What is missing is growth to support the demand for office space,” said Mr Angwenyi.
A mini survey carried out by Rwanda Today followed by interviews with property managers and commission agents showed that landlords are struggling to let out space.
For instance the 15-storey Peace Plaza (MPP) and Ubumwe Grand prime properties, which were completed two years ago still have empty space.
At Centenary House, one of the anchor tenants has relocated its commercial division to a new building. Wasac has moved its offices to the old office complex near Sulfo leaving the ground flow of Centenary House vacant.
At Police Denis buildings near Parliament, one of the media houses that used to rent a square metre at $15 per month, has moved to a more spacious building near the Rwanda Development Board.
Kigali has seen a build up of office space since 2010, when big developers started investing in premium commercial properties. Some of the properties in the central business district include Union Trade Centre, Rwanda Social Security Board and Pensions Plaza Kigali City Towers.
Knight Frank projects an additional 70,000sq metres of office space in the next two years.