Monday, April 8, 2013

Office renting a nightmare in Dar es Salaam city centre

RENTING for office space in the city centre of Dar es Salaam has currently become a nightmare despite of the current high rates introduced for renting space which has been in place for the last three years, a property management expert working with the famous Knight Frank (T) Ltd has said. The firm’s Property Manager, Hamisi Hussein said recently in a telephone interview in Dar es Salaam that, the maximum rental office space on commercial grade for an office property in Dar es Salaam city has increased by 25 percent for the last three years. He said within the period under review the renting for office spaces which is hired to clients by his company and charged in terms of US Dollar, has increased from $ 15 to current $ 21 per square meter per month while the lowest has increased from $ 10 to $ 16 per square meter for the last three years. These rates are slightly lower than what is being charged in other buildings on the outskirts of the city. For instance, at Mlimani city located in Mwenge, renting charges is measured at $ 40 per square meter. However, Hussein has attributed the sudden increase as to have been exacerbated more by the recent introduction of a Value Added Tax (VAT) on property renting which started effectively during 2012/13 financial year.  In addition to these renting rates, clients in most properties have to pay a service charge of between $ 3 to $ 4 per square meter. This is for other expenses such as water, security, fumigation and refuse collection as well as land scaping with the exception of electricity and telephone charges.  Apart from office renting rates, there are other residential renting rates which are hired at an exorbitant price rates in most prime areas within the city of Dar es Salaam. According to Hussein the high class apartments are hired at between $2,000 and $ 8,000 per month depending on the location and quality of a house. He says that, in Mikocheni, Upanga, Masaki and Oyster Bay, these are the most leading prime areas in the city of Dar es Salaam whose house renting rates is higher than any other areas and charges their apartments at between $ 3,500 and $ 8,000 per month. Other areas under which his company operates is at Kijitonyama, Kinondoni and Mbezi Africana on the outskirts of the city. In these areas an apartment is hired at between $ 1,500 and $ 3,000 depending on its location and quality.  Due to the increased scarcity of the office spaces however, some residential flats in prime areas of Dar es Salaam have been converted to commercial properties, and that this is happening because offices are scarce in the city’s central business district (CBD) in downtown Dar es Salaam, this is an aspect which has forced many people to look for offices in the city’s outskirts.


An aerial view of the Dar es Salaam city.

Areas that have been affected most include Upanga, Oyster Bay, Masaki, Mikocheni, Kinondoni and Sinza areas which are also increasingly becoming office blocks. According to the source, all prime office properties available at CBD are fully occupied. However, he further noted that the trend is set to increase in future as the scarcity of offices is increasing in the city. Another real estate expert who spoke on condition of anonymity has noted that, turning residential buildings into offices was contrary to regulations although the trend is a sign of the growth in the real estate industry. He said it was an indication that there was an influx of investors in the country, hence increasing the need of office space in most prime areas. The other reasons might have been due to new companies’ expansions and the situation was contributing to the rising demand. However he added that high rate renting in Dar had become a problem as many people prefer having offices in the CBD where most government offices are located and where social services are provided reliably. Meanwhile, an official with the Dar es Salaam based housing stakeholders commonly known as 'Merchant Chamber' has said that, there are an estimated 14 million people who spends approximately 40 percent of their income for rent housing mostly single rooms in urban areas in the country. The organisation’s Secretary General Shaukat Jaffer told The Guardian in an exclusive interview early this week in Dar es Salaam that, the high cost of renting a house is due to the shortage of 3 million housing units facing low income people in most towns and cities in the country. He said that, there is an annual average increase of 200,000 housing units in cities and towns in the country which does not suffice to cater for the need of the people in urban settlements.  But despite of this slow pace of real estate development, the cost of house rent is spiraling in the city of Dar es Salaam with house owners who keep on raising the cost of their house rents year after year. The survey can reveal that, houses in prime areas are hired at an exorbitant price rates than those in ordinary areas. It has been noticed and carefully monitored with proof that, whenever the Tanzania Electricity Supply Company (TANESCO) rises the cost of their utility, owners of houses also finds it a loophole to raise the cost of their houses on pretext that the power utility firm has increased the use of electricity. The survey by this paper has discovered that, the cost of house rent in various city’s suburbs differs depending on the location of the house and its value. For example a house in Buguruni is rented differently compared to the one found in Kinondoni or Magomeni area. The survey has discovered that, renting a room closer to a central business area is fetched at a much higher rate than that one in far flung area. The reason being that, the nearest located house to a central business has good potential than those in distant areas owing to many potentials including less expenditure on transportation. It has been discovered that, a house is hired at between Sh. 300,000 and Sh. 500,000 per month for middle class people and a single room is hired at between Sh. 30,000 and 80,000 in various parts of the city suburbs. Most single rooms are affordable by low income people majority of who are in the lower class. Most rooms in this category are found in slum settlements that cover about 75 percent of the total area of the city of Dar es Salaam. The areas are Manzese, Kimara, Tegeta, Bunju, Salasala, Mwenge, Ubungo and Kawe which are in Konondoni district, Vingunguti, Kipawa, Uwanja wa Ndege, Jetty Lumo, Kinyerezi, Ukonga, Gongo la Mboto, Tabata, Segerea and Buguruni in Ilala district. Kurasini, Mbagala, Tandika, Temeke, Kigamboni   and Mbagala in Temeke district. All, of these areas compose Dar es Salaam city. All renting costs are exclusive with the charges of electricity and water supplies which are paid separately as additional expenses which a person who hires a house has to incur as operational costs

7 comments:

James Reynolds said...

Thanks for the information. I've been looking into renting one the serviced offices in the area so i can meet with clients while traveling.

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baraka daniel said...

Thanks For the Information, But how is the Vaccancy rates in office building in CBD. And do this developers use Pre letting as a strategy to get tenant?? Your help please?

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