UGANDA – Kampala | Real Muloodi News | Kampala, the largest city in Uganda and the country’s capital, offers exciting real estate investment opportunities.
The bustling city has over 1.6 million people with a 72.8 square Miles surface area, according to Wikipedia’s 2019 statistics. Kampala city is divided into five divisions; Central Division, Kawempe Division, Makindye Division, Nakawa Division, and Rubaga Division.
Among Kampala’s five divisions, Central Division has the most expensive housing, according to Spectrum Real Estate Solutions. Central Division’s subdivisions of Nakasero, and Kololo “are the most upscale business and residential neighbourhoods in the city and Kampala’s Industrial Area,” they say.
Spectrum reports that on average, two and three-bedroom apartments in prime residential areas of Kampala stand at USD $280,000 and USD $325,000.
Before deciding on any investment venture, Spectrum advises investors to devote time to thorough research for the best outcome. Below, they account for factors driving the real estate market in Kampala, Uganda.
Factors Influencing the Real Estate Market in Kampala
- Demographics: Data on population composition shows a high population growth rate at 3.2% p.a. This growth is more elevated in cities at 4.3%, coupled with a high urbanization rate of 5.2%. This growth creates a demand for real estate, especially in urban areas and cities such as Kampala.
- Improved infrastructure: Government is continually improving the infrastructure around Kampala. For instance, suburban roads have opened up surrounding areas to development. An example of this is the Kampala-Entebbe Expressway, which connects Kampala to the Entebbe International airport through the Kampala Northern Bypass Highway. This road development has opened up Nalya and Namugongo for development.
- Multinational Corporations (MNCs): MNCs in Kampala, like banks and other financial institutions, affect economic trends by injecting more cash into the economy, rising competition for rent on residential and commercial facilities.
- Government Initiatives: Government of Uganda enacted the Condominium Property Act in 2001 to facilitate fractional sales of property. As a result, this type of real estate is more affordable. Hence, it is in high demand, and is therefore growing in popularity as an investment option.
- Increasing Disposable Income: According to the Bank of Uganda, Uganda has seen an increase in GDP at an average of 5.1% p.a. in the last five years. This increase has facilitated improved disposable income. As disposable income has increased, the population’s demand for housing and expenditure has also grown. This in turn has boosted residential and retail market segments.
- Competition for Commercial Office Space: According to Knight Frank, government and government-owned organisations are the biggest consumers of office space in Kampala. To improve occupancy rates, the government has encouraged retail businesses to move from high-rise buildings to malls. This in turn boosts occupancy rates in malls.
- Relative Political Stability and Good Governance: Stability has allowed businesses to blossom, especially in the capital.
The Average Cost of Land in Kampala’s Upscale Areas
Bugolobi, Naguru, Nakasero, and Muyenga are some of the most exclusive, upscale areas in Kampala. Spectrum outline the average cost in US Dollars for an acre of land in these areas below;
- Nakasero -USD 2,800,000
- Kololo – USD 2,000,000
- Bugolobi – USD 1,000,000
- Naguru – USD 900,000
- Muyenga -USD 500,000
Kampala Investment Opportunity Recommendations
For investing in residential buildings, Spectrum recommends Nakasero, Kololo, and Bugolobi.
And for upper-middle tenants, they recommend Naguru and Muyenga, where, for example, three-bedroom apartments are in high demand with low supply because of proximity to the city centre, convenient and ample supply of amenities such as schools and hospitals.
Kololo, Nakasero, and Bugolobi are areas they recommend for office space because of their proximity to the Business Center, ample supply of amenities, and attractive returns with rental yields on an average of 11.4%.
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