New retail developments in Dar es Salaam have shifted away from the traditional commercial hub into the residential suburbs to the north of the city centre. The scheme is fully let and the addition of a third level is underway. A number of priv”ately owned small-scale schemes have come up on Msasani Peninsular targeting the surrounding residents.
While future demand is difficult to gauge, the trend for upgrading is likely to continue as newer and better buildings come on stream. Although International House and 50 Mirambo Street are well-let, there is currently a limited market that can afford to occupy such space. The greatest scope for future development is expected to be for units of 50-100 sq m at rents of US$15-18 per sq m per month, which could target a wider bracket of the market. A total of approximately 28,000 sq m of office space is currently under construction and due to come onto the market over the next two years. This is broadly equivalent to two years’ supply based on recent annual completion rates. However, allowing for additional developments with planning consent which have been stalled or are yet to commence, the market could be entering a stage of oversupply.
Dar es Salaam city centre is the dominant retail location, with the prime retail pitch located along Samora Avenue and secondary retail provision in the adjoining streets of Kariakoo. Like the rest of East Africa, retailing in the city centre takes the form of basic ground floor shop units within mixeduse buildings, targeting the pedestrian shopper. The Sheraton and Kilimanjaro Hotels provide small retail malls catering primarily for resident guests. There are no shopping malls of international standard in or around the CBD. Haidery Plaza, completed in 1997, was the first attempt at providing a recognisable shopping centre in the city centre but has a high vacancy rate and relatively low profile due to its design and historic management and letting policies. Although lacking its own car park, the shop is trading well.
With the number of new office developments in the pipeline, overall rents in the city are expected to soften in the short to medium term, although lower quality buildings will suffer the greatest decline. Conveyancing organizations Service charges range from US$1.50 per sq m per month for grade B space in the CBD to US$4.55 per sq m per month at 50 Mirambo Street.
Commercial lease lengths have grown in line with the strength of the economy. Leases at the top of the market vary from five to ten years with break clauses incorporated in longer leases. The provision of rent reviews in dollar based leases is rare and where included, can be either pre-agreed or to open market value. Rents of up to US$30 per sq m per month were achieved on substandard, poorly managed space in 1994, reflecting the scarcity of good quality accommodation on the market. These rents however, began to fall as new buildings were developed. 50 Mirambo Street let at US$20 per sq m in 1997, while International House achieved US$23-27 per sq m in 1998.