Data Centres' Returns in Real Estate Rises Significantly During COVID-19

Kevin Namunwa | Aug 3, 2020

In the wake of the global pandemic, real estate investors have reported high losses in income. The pandemic has kept rent prices low and caused poor uptake of space, a report by realtor Knight Frank shows.

However, despite the losses incurred in the real estate sector, some investors have managed to get a profit during unprecedented times. The report by Knight Frank shows that real estate investors who have rented out their properties to data centres posted a 16.96% rise in return while others recorded declines.

Hospitality, retail, and health centres have been the most affected assets, posting 50.5%, 41.4% and 26.7% drop respectively in income in the 12 months to April.

Others such as office and manufacturing properties posted 19.54% and 16.97% declines respectively.

Investors who have rented out properties to data centres have benefited from the demand from online and software infrastructure firms.

The decline in other sectors has been attributed to economic slowdown heightened by the pandemic that has resulted in most businesses putting on hold space requirements as they focus on operational rather than capital expenditure.

According to Knight Frank managing director Ben Woodhams, many tenants have been looking to cut overheads while others don’t want to make any commitments because they do not know the market situation in the near future.

The virus crisis has seen consumers have changed their shopping patterns from retail centres to online shopping. This affected the ability of real estate properties to generate income.

“Landlords over the review period provided concessions and incentives to retain and attract new occupiers however this was done on a case by case basis,” Mr Woodhams said.

Matatus to Minimize Corona Losses as Isuzu Redesigns Bus Sitting Arrangements

Car manufacturer Isuzu East Africa and Kenyan bus operators have collaborated to redesign 23-passenger mini-buses to cut the losses the mata...