Uganda’s retail sector, especially shopping malls, has posted remarkable growth in the first six months of 2024, according to the latest research. This is despite the harsh economic conditions affecting many households, leaving many with little to spend after buying the basics.
Data compiled by Knight Frank Uganda shows overall sales posted by retail businesses in selected shopping malls located within the Kampala City Metropolitan area grew by 30 percent in the first six months of this year, while average customer traffic increased by five percent during the same period.
This means that most of the retail spaces were taken. Data on occupancy levels registered by retailers in upmarket shopping centres indicated a three percent rise between January and June 2024.
Commercial rental space taken up by retailer engaged in the sale of fast-moving consumer goods increased by 1,900 square metres in certain shopping malls during the first half of this year.
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Some 1,606 square metres of commercial space are expected to be occupied among retail businesses seeking to expand their operations before the end of the year.
In contrast, demand for prime residential accommodation suffered from low sales during the same period a trend that yielded a one per cent decline in general occupancy levels recorded in high-end residential units compared to the same period in 2023, according to the research data.
Overall demand for commercial office space also declined during the same period. Vacancy rates registered by upper-grade office buildings increased by one percent during the first six months of 2024 compared to the same period in 2023.
Uganda’s total tax collections for financial year 2023/24 are estimated at Ush27.725 trillion ($7.4 billion) compared to an official target of US$ 29.672 trillion ($79.6 billion) according to figures published by PWC Uganda.
This translates into a revenue shortfall of roughly Ush1.946 trillion ($520 million) for 2023/24- a sign of widespread, financial difficulties experienced by households and businesses since last year.
“We track retailers’ performance across the six large malls we manage in Kampala. Our retailers serve a niche market but much of the consumer spending there is targeted at groceries which all of us need quite often.
“Though many people are struggling with falling disposable incomes, Uganda’s middle class is still growing and also bears strong spending appetite,” said Hillary Mbaihayo, a research analyst at Knight Frank Uganda.
The minimum rental charge levied on retailers averaged $250 per square metre, for rental space amounting to less than 10 square metres.
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Rental space amounting to less than 50 square metres costs $48 per square metre, while a lettable area of less than 100 square metres costs $40 per square metre, Knight Frank data shows.
“Most of our retailers are struggling a lot these days. They are being forced to top up on rent using other sources of income before clearing their rental obligations at the end of month,” observed Humphrey Derrick Sekitoleko, an accountant at Taukal Limited.
