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Alternative Investments | A Look At The Real Estate Market In Uganda

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Posted April 29, 2013 by Ugandan Diaspora News Team in Business ~ 12,525 views

     

About 93% of Uganda’s urban population lives in slums. In Zambia 74%, Nigeria 80%, Tanzania 92.1%, and Ethiopia 99.4%. In Kampala, Uganda’s capital, 85% of the nearly 1.8 million people live in slums. Kampala’s ~1.8 million people make up 4.9% of Uganda’s population (34.1 million). Currently only 20% of the land in Uganda is titled, with the balance 80% held under customary tenure system. ‘There is some concern that there is a “bubble” in land values, especially in Kampala, being created by land speculation driven by the lack of alternative investment opportunities, and that at some point, there could be a correction.’

One U.S. Dollar = 2,610 Uganda Shillings
A plot = 50 feet X 100 feet (11.4 decimals)

  • The cost of land in Kampala has been rising rapidly, making it unaffordable to a significant chunk of the population. Between 2002-2008 land value doubled-quadrupled in Kampala. A plot in the desirable Ntinda area that sold on average for $15,000 in 2002, was selling four times as much at $60,000 in 2008. In the Nsambya area, a plot selling for about $7,500 in 2002 was selling for about $30,000 in 2008. In the less well-serviced Kisenyi and Bwaise areas, plots selling for about $5,000 in 2002 were fetching about $10,000 in 2008 (See Figure 1 for Kampala map).
  • Currently the average cost of a plot of land is $5,000 (13.1 million Uganda Shillings). The per capita income in Uganda stands at about $506.

Figure 1: Kampala Suburbs

  • ‘The continued growth of Kampala’s population has resulted in a large expansion of the housing sector over the past 20 years. However, the construction of new housing has lagged significantly behind population growth. More than 65% of the population rents housing and over 53% of the population lives in “tenements” of less than two rooms. In 2000, approximately 36% of the houses were built of mud and wattle.’
  • There’s opportunity for innovative Ugandans, within the Public and Private sector, to tackle a couple of glaring problems:

Affordable housing for all
Urban planning
Clear Property Rights
Land Use administration

Affordable Housing

  • A couple of entities are working hard to innovate and provide affordable housing to the average Ugandan – I use the term ‘affordable’ and ‘average Ugandan’ loosely.
  • Last year we introduced you to Synergy Partners run by Jaffar Tonda:
  1. Synergy is a boutique residential real estate development firm that also offers property brokerage, property management, and general construction.
  2. The firm is re-thinking house design and financing, without compromising quality, to hopefully pass on cost savings to the client.
  3. Synergy is currently developing “Birungi Gardens”, a 16 gated-home housing development estate located off Kira-Kasangati road, one of the fastest growing neighborhoods in Kampala.
  4. Each house in Birungi Gardens offers sufficient space: 3 bedrooms, 2 bathrooms, 2 car parking spots, a garden, 1 private maid’s quarters, and also features main boundary wall and main gate, individual compound & gate for each home, landscaping, tarmac road network within the estate. Birungi Gardens is 5 km from Quality Supermarket – Naalya, 6 km from Metroplex Mall – Naalya, and 6 km from the Northern by-pass.
  5. Each house sits on a plot (50ft X 100ft or 11.4 decimals).
  6. The firm has segmented and priced out the different phases of the building process: customers can buy a fully-completed house, land with a shell-house, or just land (See Figure 2 for pricing).
  7. To ensure uniformity at the housing estate, customers who purchase land will have to follow a particular house plan and be allowed a maximum of 5 years to complete construction.

Figure 2: Synergy Partners’ Pricing Schedule

Affordable Areas

  • It’s tempting to buy into the inflated immediate Kampala area suburbs but I urge you, think broadly. Kampala is exploding, and exploding fast. Over the long term you may be better served to reach for the low hanging fruit in the currently cheaper areas far outside of the capital city.
  • Figure 3 shows the expansion of Kampala’s urban extent between 1990 and 2002.

I wonder what the next 10, 20, 30 years will look like?

Figure 3: Expansion of Kampala’s Urban Extent 1990 (in red) to 2002 (in green)

We leave you American playwright Eugene O’Neill, “But land is land, and it’s safer than the stocks and bonds of Wall Street swindlers.”

Enjoy the week!

Emmanuel Sabiiti
Team: Zach Aprea, Jay Dhamsania
Email: info@emmaresearch.com


About the Author

Ugandan Diaspora News Team

Ugandan Diaspora News Online is an independent, non political news portal primarily aimed at serving Ugandans who work and reside outside Uganda. Our aim is to be a one stop shop for everything Ugandan and the celebration of our Ugandan heritage.

3 Comments


  1.  

    Good stuff, i like the analysis!




  2.  
    Renee

    What an utterly depressing article. I have lost the will to live!!!




  3.  

    Nice article we are motivated,thanks





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