Why commercial buildings demand has fallen sharply


Dar es Salaam. Real estate agents are increasingly finding it difficult to attract tenants for commercial premises in Dar es Salaam as residents adapt to new economic realities.

A week-long random survey by The Citizen in the posh metropolitan areas of Masaki, Msasani Peninsula, Mbezi Beach, Ununio, Mikocheni, Kawe and Bahari Beach revealed that – contrary to the past scenario when tenants were the ones who were frantically searching for premises to rent – it is now the premises that are begging for tenants.

Posters bearing messages to the effect that premises are available for renting are not uncommon in Dar es Salaam as more and more tenants shift to middle and lower-end locations to save on rental costs and direct the savings to other pressing needs.

“Things are not as they used to be… Currently, I get up to eight houses for rent and two for sale… I scout around in vain trying to market them to prospective tenants/buyers for several months,” said a real estate broker, Ms Sakina Mkande. Ms Mkande, who resides at Ununio on the outskirts of Dar es Salaam, said she has been in the business for over 20 years –and that, for most of that time, she used to receive prospective tenants frantically looking for premises to rent.

About three years ago, she found it difficult to convince house owners to hire their services as estate agents. Alas, that has drastically changed – what with house owners seeking her help to secure tenants for their empty buildings.

“As we are talking here, I have been contracted to find a buyer for a one-storey residential building which is located at Ununio… The asking price was Sh700 million – but it has already dropped to Sh400 million for lack of interested buyers,” she said.

Previously, she revealed, one would readily pay an average of $1,250 in rent for a self-contained three-bedroom residence located along Bahari Beach. Today, the most expensive rent that one is willing to pay for such premises is around $700.

“In fact, in some areas, we are now talking about Sh1 million (about $440),” she said.

Previously, she said, estate agents – commonly known in Kiswahili as madalali – easily secured clients who were ‘big bosses’ seeking to rent houses for their girlfriends, a trend that ended somewhat abruptly. Today, house owners primarily depend on customers who seek premises for office use – and, occasionally, for their employees.

A real estate firm told The Citizen that the reduction in disposable incomes for the upper-end clients has resulted in a significant fall in rental charges for most premises in the past two years.

“Getting a tenant is now a big problem. This has forced landlords to lower rents… In the Masaki, area of the city, we can offer a fully-furnished, self-contained three-bedroom house at $2,500 rental per month. But, believe you me: the same house went for $4,000 per month two years ago,” said a senior official of a registered real estate firm on condition of anonymity.

In Upanga, he said, rentals have gone down from $1,800 a month to around $1,000 for a three-bedroom house.

However, the chief executive officer of the Tanzania Mortgage Refinancing Co Limited (TMRC), Mr Oscar Mgaya, noted that – looking at the broader picture – the demand for decent houses is still high in Tanzania’s growing population.

These sentiments come at a time when official figures show that prospective investors tend to avoid putting their money into the construction of commercial buildings.

Investments in the sector dropped from $1.12 billion a year to a measly $200 million in 2017, National Bureau of Statistics (NBS) figures show.