INVESTING IN KAMPALA

January 9, 2022
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Prior to making any investment, it is very important to spend a lot of time in the target market, collecting and analyzing data to make the best investment recommendation.

The capital city of Uganda, Kampala covers a total area of 72.8 square miles and has an estimated total population of 1.6 million in 2019, according to the Wikipedia. It is divided into 5 divisions, these include: Central, Nakawa, Makindye, Kawempe, Rubaga.

Among the 5 divisions of Kampala, the central division has the country´s most expensive housing. The central division is made of: Kampala central business district, Nakasero and Kololo. These areas are the most upscale business and residential neighborhoods in the city and Kampala’s Industrial Area.

The average price of two- and three-bedroom apartments in prime residential areas of Kampala stood at US$280,000 and US$325,000, therefore let us start by covering the key drivers and challenges for the real estate market in Kampala, land prices, the market and the investment opportunity.

Mapeera Building Kampala
Factors Driving the Real Estate Market in Kampala Uganda
Uganda has a deficit of 2.1 million housing units and is expected to reach three million by 2030, according to Uganda Bureau of Statistics. The deficit, data shows, will further expand to eight million units, of which 2.5 million will be in urban centers in two decades.

For most people, real estate represents a significant portion of their wealth. This is especially true for homeowners in Kampala Uganda, The real estate market’s size and scale makes it an attractive and lucrative sector for many investors, but to successfully invest in the space, you’ll need to know what factors drive the real estate industry, there are several factors affecting real estate investment in Kampala: these include:

Demographics –These are the data that describes the composition of a population, such as gender, age, race, income, and so on. Uganda has a high population growth rate of 3.2% p.a and growth rate is higher in cities at 4.3% and a high urbanization rate of 5.2% hence creating demand for real estate, especially in urban areas and cities such as Kampala.

Infrastructure, the government has played a big role in improving of the infrastructure around Kampala, such as roads in the suburbs, which have opened up the areas for development for example: Entebbe express highway directly route connecting Kampala to International airport through Northern bypass which has also opened up Nalya, Namugongo for development

Multinational Operations (MNCs) in Uganda – play significant roles in shaping the country’s economy for instance the financial institutions like banks they provide finances to real estate development and also renting both residential and commercial spaces in the city for their daily operations which also leads to an increase in the footfall for retail space.

Government Initiatives – The Ugandan Government is boosting real estate activities in Kampala and Uganda through initiatives such as: Enacting the condominium titling system facilitating fractional sales of property hence making real estate more affordable

Increasing Disposable Income – Driven by an increase in GDP, which has on average grown by 5.1% p.a. in the last five years according to the Bank of Uganda, the population’s capacity to demand for housing and expenditure has also grown, thus boosting the residential and retail market segments,

For commercial office, the government bodies and parastatals take up the largest amount of office space in the city according to Knight Frank, and in retail, the government has been encouraging retailers to move from the high street to the malls thus boosting occupancy rates in the malls, and,

Uganda is also experiencing a relatively stable political environment and good governance.

Average prices of land in the upscale areas of Nakasero, Kololo, Bugolobi Naguru and Muyenga Kampala Uganda 2019/2020
The average price of an acre land in Nakasero is USD $2,800,000
The average price of an acre land in Kololo is USD $2,000,000
The average price of an acre land in Bugolobi is USD $1,000,000
The average price of an acre land in Naguru is USD $900,000
The average price of an acre in Muyenga is USD $500,000
Investments opportunities in upscale areas of Kampala
Residential in order to achieve High Income the areas to consider investment are Nakasero, Kololo, Bugolobi. For example Kololo – High End Serviced Apartments are on High demand evidenced by the more than 85% occupancy, proximity to CBD

Then for the Upper Middle these are the areas Naguru and Muyenga for example Naguru – 3 bed apartments because there is High demand, low supply, proximity to CBD, ample supply of amenities including schools and hospitals

Then for Commercial Office these are major key areas Kololo, Nakasero, Bugolobi- because of the fact that there is High demand, low supply, proximity to CBD, ample supply of amenities, attractive returns with rental yields of on average 11.4%

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