UGANDA, Kampala | Real Muloodi News | Residential property prices in Greater Kampala have begun to falter in the face of inflation and rising interest rates. However, property prices in Uganda’s newest municipalities, towns and cities continue to rise.
On 30 September 2022, UBOS released the Residential Property Price Index, indicating that property prices in the Greater Kampala Metropolitan Area had fallen by 12.4% in the first quarter of the fiscal year 2022/23 from what they were in the fourth quarter of 2021/22.
According to UBOS, the residential property price drop was caused by weak demand in the face of surging inflation, which has already reached double figures.
With inflation in the rise, Bank of Uganda has steadily increased the Central Bank Rate (CBR) in an effort to reduce the money supply to combat rising inflation. The CBR currently stands at 10% as of October 2022, the highest level recorded since 2012.
The increasing CBR has caused mortgage rates to rise, which results in decreased home buying demand, another contributing factor in the fall in home prices in Kampala and its surrounding areas.
However, in defiance of these economic pressures, property prices in Uganda’s other towns, cities and municipalities continue to perform strongly.
A large contributing factor in the strong property performance in Uganda’s outer regions is the elevation of some of the urban areas to town council, municipality and city status.
The higher designation, particularly that of city status, attracts investment and business growth, thereby providing a boost to local communities and opening up new opportunities for the people who live the areas.
“Cities have the potential to propel growth, thereby attracting capital, spurring innovation, providing higher productivity jobs. Services can be provided more cost-effectively, improving access for all,” says Somik Lall, World Bank Lead Urban Economist for Africa.
Therefore, attainment of city status attracts many newcomers, leading to a real estate boom and causing land prices in and around such areas to skyrocket.
The current state of the economy itself may also be a driving factor. Evan though property prices in Kampala have begun to decline, most Ugandans cannot afford land and property in Greater Kampala and its surrounding areas.
Coupled with rising inflation driving up the costs of common goods and services, many can no longer afford to live in Uganda’s capital, and therefore are fleeing to up-and-coming towns searching for a cheaper housing, cost of living and more opportunity.
For instance, a 100ft by 100 ft piece of land in Biharwe Town, one of the suburbs in Mbarara South Division with the greatest population growth, sells for between USh800 million and USh1 billion.
A 50 by a 100-foot plot in Booma, which is comparable to Kololo and Muyenga in Kampala, costs between USh500 million and USh800 million. The same plot sold for between USh300 million and USh500 million four years ago.
A block of land measuring 50 feet by 100 feet in Kimaanya and Bisanje in Masaka City that once cost USh10 million now costs USh14 million. A few years ago, the city annexed these territories.
According to Mr Jude Ssonko, the owner of Omuso Property Agency in Masaka City, a 50-foot by 100-foot property that cost USh100 million five years ago now sells for between USh500 million and USh800 million in the city’s core downtown area.
“In Nyendo Mukungwe Municipality, a 50ft by 100ft costs USh18, up from USh15m. In Bwala, it costs USh25m up from USh24m, while in Misali, a plot, which was costing USh6m in 2019, has also increased to Shs10m,” Mr Ssonko adds.
A 100×50 plot is now selling for between USh10m and USh20m, according to Mr Mustafa Ssempala, chairperson of Gayaza Village in Kimaanya/Kabonera Municipality.
A 50-by-100-foot parcel of land costs between USh30 million and USh40 million in Apac Municipality.
According to Mr Moses Okello, a real estate dealer, land prices in Soroti City fluctuate and are based on location. Senior Quarters homes range in price from USh300 million to USh500 million.
Depending on the location, the price of a parcel of land in Kabale Municipality spanning 100 feet by 50 feet has grown from USh30 million to USh300 million.
“The price of a plot in prime areas, especially around education institutions and health facilities, has increased from USh30m to USh60m,” the mayor, Mr Byamugisha Sentaro, says.
According to Mr Kharuna Kamba, the Town Clerk for the Kisoro Municipality, the high population has led to an increase in plot prices in his region.
According to Mr Stephen Habyarimana, Director of Kisoro Property Masters, the cost of a plot measuring 50 feet by 100 feet in the Central Division of Kisoro has increased from USh150 million to USh200 million.
50 feet by 100 feet property in Ruti on the Mbarara-Kabale Road costs between USh200 million and USh300 million. The same was previously sold between USh150m and USh200m.
A 50-foot by 100-foot plot now costs between USh200 million and USh300 million from Mile Two to Makenke Barracks in Mbarara City, up from between USh150 million and USh200 million.
Richard Mugisha, Deputy Clerk for Mbarara City, confirms that once the region was given city status, land prices began to rise.
“We expect new buildings in the city to be at a minimum piece of land of 50ft by 100ft plot because there is development concentration,” he says.
According to information provided by Asianzu Consults Limited, a real estate agency in Arua City, land measuring 50x48x47x40 in Ombaci and Adumi costs between USh9 million and USh12m. A plot of land measuring 19 by 19 by 17 by 15 feet in the Ediofe region costs USh20 million, while a plot of 85 by 25 feet with a title costs at least USh60 million.
A 15 by 30-meter plot in Koboko Municipality costs between USh50 and Sh80 million, depending on the location.
A 50-by-100-meter block of land in the Central Division of Masindi Municipality is being offered for between USh7 million and USh10 million.
A 100 by 100-foot land along the road in Fort Portal costs between USh150 million and USh250 million. Similar parcels of land in the same region that are farther from the road might cost anywhere from USh20 million to Sh50 million.
A 100 by the 100-foot plot in Mbale currently costs approximately USh100 million, up from USh50 million three years ago.
An average plot of land spanning 50 feet by 100 feet costs USh10 million in Jinja North City Division, up from USh7 million before Jinja was given city status.
50-foot by 100 feet parcel of land costs between USh20 million and USh25 million in Kamuli, USh15 million in Namalemba, and between USh15 and USh20 million in Bulangaire, a rapidly developing metropolitan region.
For those who are priced out of Kampala, Uganda’s up-and-coming towns, cities and municipalities are an attractive alternative option. These areas are undergoing rapid economic, social, and infrastructural development, and with that comes commensurate growth in real estate prices, ensuring a good return on your investment. However, they are quickly becoming unattainable, just like in Kampala.
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