16 Jan 2017 - Ethiopia (Addis Ababa)
I am in Addis Ababa looking to satisfy a corporate office requirement. The office market here remains a landlord’s market. This is mainly due to the fact that government policy focuses investment into leisure (hotels) and residential (apartments). So when you look at the skyline there is a significant amount of development going on but on closer inspection relatively few developments are new offices.
The main office areas are in the centre around the CBD, where the government and banks are located, Kazanchis / Kirkos, where the UN has its main compound, and Bole where many businesses are located.
The occupier market is largely dominated by government, aid agencies and NGOs, although this is starting to change as the government slowly eases restrictions on entry. Addis is the location of the African Union and the UN’s Economic Commission for Africa (ECA). Both of these draw associated agencies into Addis and provide a thriving expat community.
The lack of supply has meant the landlords have not had to work hard to find tenants. I don’t think I entered any building where the owner could tell me the exact size of the office space available. Several refused to give me an asking rental until they had either received a formal written request or met directly with my client. Most buildings would not comply with a multinational’s standards but as most of them are fully committed before completion the developers have little incentive to change.
As can be expected rental rates and capital values have been increasing. Most clients want to know what a Grade A office building rents for in Addis. However, defining what a Grade A office building would fetch in the market can be extremely difficult. This is because there are very few deals reported and hardly any Grade A (even by local standards) buildings have been constructed. I would estimate that if a good quality building came onto the market it could achieve a rental in the order of Birr 500 - 600 per sqm per month (about US$24.70 / sqm / mth). The better buildings currently have waiting lists of tenants hoping some space will become available. I can think of several other markets around the world where the landlords would dream of such a scenario!
Here is a photo looking up Airport Road towards the CBD:.