High Rents Pushing Tenants Out of Dar CBD
 

The biggest challenges to Dar central business district is Ubungo, about 10 km from the city centre, where in recent days office and industrial space to let has increased

By ABDUEL KENGE
SPECIAL CORRESPONDENT

MANY Dar es Salaam businesses are moving out of the City’s central business district to residential areas on the outskirts of the city to avoid high rents.

Experts say most big business are running away from the artificially high rents at a time when more highrise office blocks are being constructed. The demand and supply of office space in Dar has no relationship with the tenancy rates demanded by landlord, say the experts.

The experts also say there an acute shortage of parking space for tenants and and clients poor pedestrian access, which is worsened by uncontrolled vendors crowding pavements with their wares.

Knight Frank property manager Hamad Abdallah told The EastAfrican recently that the rents in excess of $30 per square metre per month that were being demanded by some developers in sub-standard blocks in 1994, have since been lowered to about $18 per sq metre in prime locations.

Rents of secondary space are currently in the region of $10-$12 per sq metre per month and under downward pressure, Mr Abdallah said.

However, he said, a number of high profile tenants have recently downsized or moved to cheaper accommodation, "either in pocket (decentralised) locations or in converted houses. This has led to an increase in the availability of good quality second-hand space in the central business district, which will take some time to be absorbed."

These alternative rental places are far cheaper as tenants take up properties on a residence basis that may range between $500 to over $1,000 per month depending on the locations.

He said the biggest challenges to Dar central business district is Ubungo, about 10 km from the city centre, where in recent days office and industrial space to let has increased. The Ubungo Plaza, with 9,000 sq metres of rental space, for instance, is 90 per cent full.

Mlimani City coming up next to the University of Dar es Salaam, a stone's throw from Ubungo Plaza, is to house the largest retail complex in Dar es Salaam, thus giving the central business district more competition.

Another threat is Mayfair Plaza, a mixed-user scheme at Kinondoni, north of the city centre, currently the largest retail centre covering 12,000 sq metres, including a conference and business centres.

But despite all this pressure from pocket locations in suburbs, Tanzanians investors seem reluctant to lower prime retail rents because of the desire to get a quick return on real estate investments.

William Mauki of H&D Consultant Ltd said: "This has resulted in a number spaces being left unoccupied in the central business district."

He said that with the completion of construction of the Bank of Tanzania (BoT) twin towers, with a total of 8,000 sq metres, a number of rental spaces would come on the market because space rented by BoT at the NDC block and PPF Tower on Ohio Street would be vacated.

The new Waterfront House, 7,700 sq metres overlooking Dar es Salaam port, which has been reconstructed by the National Social Security Fund (NSSF) after being gutted by fire a decade ago, is still struggling to find tenants, while the 22-floor Mafuta House under construction by NSSF will put more office accommodation on an already flooded market.

Knight Frank's 2004 Property Market Report for Southern and East Africa says, "Prime retail rents are still in the order of $15-$18 per sq metre per month falling to $7, but we expect to see a fall in prime rents in the medium-term to settle at between $12 and $15 on smaller units."

On the other hand, rents in Dar es Salaam central business district are also being pushed up by the high and rising costs of energy, particularly in air-conditioned high rise blocks, and cost of parking, or lack of parking, as well as the impact of value added tax, which is another 20 pert cent addition to rent.

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