Basics/ Facts about cost of Land in Kampala city and its suburbs
By Joseph Kiggundu
What you must know about costs of Land :
Because of the high demand for land in Kampala or near town or a city premised upon its capacity to yield good returns, the cost will be very competitive. Anyone who tells you otherwise is a fraud move away.
Location remains the most important key when choosing a home or investment(business and rental units/apartments). So it goes without question that most property developers and real estate investors prefer buying properties that are as close to the city or urban centres as possible.
A good number of Ugandans who have stable and reasonable incomes often approach me or come into our offices with a view of buying land around the city to construct homes or set up rental units/apartments. What amazes though is how wrong they get it when it comes to the cost of such investments.
Most of them have a budget of between Shs 4m and Shs 10m for a piece of land around 15 to 20 kilometers from Kampala city centre. It is hard to disabuse them of this perception, especially if they have dealt with some unscrupulous and unregistered brokers who convince them that such a deal is possible.The major victims are people working around middle east and they end up losing their little fortune to these fraudulent characters or conmen.
Rental business is a good investment,it yields good returns over time and provides a constant cash flow during both the short and long term. However, there are required circumstances under which rental units/apaartments can succeed. Your rental business predominatly thrives in an urban setting, feeding on commuters and many workers within the urban centre or within the town.
Because of high demand for land near town or a city premised upon its capacity to yield good returns as a result of its commercial viability, the costs will be high and very competitive. To sum up, the location of your apartments or rental units near town or city centre is key to their thrive, and the best location is the one closest to the urban centre. When a town grows, its outskirts gain demand, thus inducing higher cost of land. Tenants need access to key amenities which can only be found in urban centres. These among others include food,hospitals, schools,acess roads,electricity,water and entertaiment places and other basic needs of life.
The more accessible to economic activities, the more the value of land. For instance, most of the metropolitan cities have the maximum land values at the centre, or at the central business district of the city.
Also consider what you hope to achieve by investing in rentals/apartments;are you investing to retire comfortably? Is it to spend more time with friends and family?or is it both? Determining your goals will help you answer most these questions; what type of rental property are you locked onto? commercial or residential? figuring out these before is the most efficient ways to build a business and buying land upon which to construct your rental business.
Research findings indicate that average prices across 151 cities world wide have had such a drastic rise in the past 17 years. On average prices increased by 10.6 percent from 2003 to 2021. Therefore, the expectation of cheap land either in kampala or around it is like swimming through a rock. Kampala as a city has a housing deficit of about 700,000 units. According to Centre for Affordable Housing Finance in Africa (CAHF), its estimated that more than 71 percent of households in kampala rent their homes. This means that most investors want to build rentals in order to meet this available demand. As aresult, search and demand for land in kampala and near kampala increases, which leads to a positive correlation on price.
Real estates is like any other product on the market that depends heavily on the law of supply and demand .
More demand drives prices high. Investors will know if a rental property is a good investment if their net cash flow remains consistently positive. Seasoned real estate investors know that to have a solid rental plan and business, they must first mind their due diligence and ensure that a rental property is indeed a good investment.
As a result, with reference to growing market trends,prevailing market prices, still in light of the absence of a land price index in Uganda, in order to build a thriving rental business in the current times, one will need a minimum of Shs 35m for 12 decimals(50x100) plot in a growing town around in the country.
With an investment of a piece of land of Shs 35m you can build a thriving rental business on Masaka road; kyengera, Nsangi, Maya and on Hoima road Nansana,kayunga,wakiso town,kakiri and then on Bombo road in places like Kawempe,matugga, kawanda etc and on Gayaza road places like Gayaza town, kitetika,mpelerwe,kasangati,magere to zirobwe, and on Jinja road places like Seeta, Bukeelele,Mukono, Bweyogerere,kirinya,kireka,Banda,Namanve and others and then on Enrtebbe road places like Ssisa, Bwerenga,kawuka, Buzzi, Namulanda,Busaabala,zana,sseguku etcs othres like Buloba,Bulenga,Bulaga on mityana road are also good for rental business. Prices will shoot up more than Shs 250m as you get closer to the more upscale and traditionally known towns such Ntinda,Kiwatule,Ndeeba,Mengo,Rubaga and Nateete. If one wants to invest in these places, they will need to have an average of Shs 100m to 350m for a piece of land suitable commercial or residential rentals. If anyone tells you differently just get to know that they are trying to con you.The only way one can buy a plot in those areas in about or below SHS 70M ,is by buying distressed properties from the bank or reliable real estates companies like Sparta properties ltd.
Renters need access to key amenities that runs their daily life like food,transport, electricity,services like resturants,shopping centres,medical facilities,schools,play grounds, which can only be found in towns or urban centres.
Joseph kiggundu is a graduate from Makerere University Kampala and a managing director of Sparta Properties Limited.