East Africa’s commercial property market is increasingly moving away from a one-size-fits-all investment story.
Instead, the region’s three largest economies are carving out distinct competitive advantages, with Uganda emerging as East Africa’s highest-yield industrial property market, Tanzania strengthening its position as a logistics and infrastructure hub, and Kenya consolidating its place as the region’s most mature commercial real estate market.
Details contained in the Knight Frank Africa Report 2026/27 suggest that investors are becoming far more selective, allocating capital according to the strengths of individual markets rather than treating East Africa as a single real estate destination.
Industrial and logistics property has become Africa’s strongest-performing commercial asset class, fuelled by manufacturing growth, regional trade, supply-chain expansion and rapid urbanisation.
Within East Africa, those trends are producing three increasingly different investment propositions, with Uganda emerging as East Africa’s highest-return market.
The report indicates that Uganda has quietly become one of Africa’s most attractive industrial property markets, with Knight Frank Africa noting that prime industrial assets in the country now deliver yields of approximately 13 percent, matching only DR Congo as the highest on the continent. Tanzania follows at 10 percent, while Kenya records 9.5 percent.
Those returns reflect growing demand for warehouses, logistics facilities and industrial parks as regional trade, manufacturing and distribution networks expand.
But Uganda’s investment story is becoming broader than industrial property alone.
A separate Knight Frank – Kampala Short-Term Rental Market Report 2026 shows Kampala has evolved into one of East Africa’s fastest-growing professionally managed short-stay accommodation markets, adding another investment opportunity alongside industrial real estate.
The report estimates there were 3,478 active Airbnb listings by December 2025, representing 56.7 percent year-on-year growth in supply. The average daily rate stood at $39 (Shs142,350), with a 44 percent median occupancy rate and estimated annual revenue of $6,333 (Shs23.12m) per listing.
Unlike many African cities where short-term rentals depend heavily on leisure tourism, Kampala’s market is anchored by institutional demand.
Knight Frank says business travellers, diplomats, NGO professionals, development agencies, corporate consultants and diaspora visitors now form the market’s core customer base, creating year-round demand that is less exposed to seasonal tourism cycles.
Uganda also received approximately 1.37 million international visitors in 2024, with Kampala serving as the principal gateway for business travellers before they continue to other destinations.
That demand profile is helping professional operators outperform informal landlords as the market becomes increasingly sophisticated.
Knight Frank argues that Kampala’s short-term rental market is entering a new phase of professionalisation, with the report noting that the highest-performing operators are no longer simply those with the best properties but those offering hotel-quality management, professional marketing, dynamic pricing and reliable infrastructure such as backup electricity, water storage and high-speed internet.
It notes that “a well-managed unit in Kyanja will consistently outperform a poorly managed unit in Kololo,” which highlights how operational quality is becoming a more important differentiator than location alone.
Knight Frank also indicates that more than 1,000 new apartment units are expected to enter Kampala’s prime residential neighbourhoods over the next 12 to 24 months, which increases supply and accelerates the shift towards professionally managed portfolios, with Bugolobi, Bukoto, Mbuya and Entebbe offering the strongest risk-adjusted investment opportunities because they combine relatively lower acquisition costs with access to premium guest segments.
But Knight Frank also warns that Usaid funding reductions and broader donor spending cuts have begun softening demand from expatriate NGO workers in premium suburbs such as Kololo, Nakasero and Naguru.
The two reports suggest that Uganda’s property market is becoming increasingly diversified, offering investors opportunities across industrial property, logistics infrastructure and professionally managed residential accommodation.
Tanzania’s advantage is infrastructure
While Uganda is increasingly attracting investors through higher returns, Tanzania is positioning itself around infrastructure and logistics.
The Knight Frank Africa Report indicates that industrial property yields in Tanzania stand at approximately 10 percent, supported by sustained investment in transport infrastructure, expanding logistics operations and continued urbanisation.
Dar es Salaam is strengthening its role as East Africa’s principal maritime gateway, while investment in ports, railways and road networks continues to support commercial and residential development.
Rather than competing directly with Uganda on investment yields, Tanzania is increasingly competing on connectivity and trade.
Kenya deepens institutional investment
On the other hand, Kenya remains East Africa’s largest and most sophisticated commercial property market.
According to Knight Frank, Nairobi’s prime office occupancy has climbed above 80 percent as companies increasingly relocate to modern Grade A office buildings offering higher environmental standards and greater operational efficiency.
Older office buildings continue to struggle as occupiers pursue a “flight to quality.”
The report also points to continued growth in Real Estate Investment Trusts, Special Economic Zones, logistics parks and mixed-use developments, reinforcing Kenya’s position as the region’s preferred destination for institutional property investment.
Retail development is similarly evolving towards neighbourhood shopping centres and convenience-led formats aligned with changing consumer behaviour.
Although Kenya’s industrial yields are lower than Uganda’s, its commercial real estate market remains the deepest and most diversified in East Africa.
Three different investment stories
The contrast between Uganda, Tanzania and Kenya illustrates how East Africa’s commercial property sector is becoming increasingly specialised.
Uganda is building a diversified investment proposition around high industrial yields, logistics infrastructure and a rapidly professionalising residential investment market, while Tanzania is leveraging large-scale infrastructure investment to reinforce its role as the region’s logistics gateway.
On the other hand, however, Kenya continues to attract institutional capital through premium offices, Real Estate Investment Trusts, logistics parks and sophisticated mixed-use developments.
Knight Frank argues that commercial property investment across East Africa is increasingly being shaped by sector expertise, asset quality and market specialisation rather than broad economic growth alone.
Thus, the property market in East Africa is three distinct investment destinations, each offering a different balance of risk, return and long-term opportunity.
Uganda increasingly appeals to investors seeking higher returns and emerging sectors, while Tanzania and Kenya appeal to investors focused on infrastructure-led growth and on institutions seeking market depth and scale, respectively.