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Should You Build Rentals to Sell or Rent Them Out in Uganda?



Uganda’s real estate market has been experiencing significant growth in recent years, driven by a housing deficit that is expected to reach 3 million units by 2030. For those considering investing in real estate through rental apartments, a crucial decision awaits: should you build these properties to sell or rent them out for long-term income? In this blog post, we’ll explore the factors that can help you make an informed decision.

Market Analysis:

The housing deficit in Uganda is a pressing issue, estimated to be between 2.1 million and 2.4 million housing units. With a population of approximately 37.7 million and an average household size of five people, the demand for housing is substantial. In the capital city, Kampala, 7 out of 10 households rent their dwellings, making the rental market a prominent part of the real estate landscape. Notably, 6 out of 10 apartments in Uganda are one-room houses, commonly known as “Mizigo.”

Financial Analysis:

Accessing mortgage financing in Uganda remains a challenge, with only 1 percent of Ugandans having access to this option. Rental pricing plays a pivotal role in the decision-making process. According to experts, Ms. Baziwe suggests that affordable rental prices for households typically range between UGX 50,000 to 100,000. Meanwhile, Mr. Agaba, the former president of the Real Estate Agents Association, notes that dominant rentals range from UGX 100,000 to 250,000, with higher-end properties rented between UGX 300,000 and 450,000. People who can afford more often prefer to build their own houses.

Legal and Regulatory Information:

The Ugandan real estate market has faced challenges due to a lack of sufficient legal framework. However, the new Tenants Bill 2023 aims to address these issues. With the new bill, both landlords and tenants can expect clearer guidelines and dispute resolution mechanisms, potentially improving the rental market’s stability.

Location Considerations:

When deciding whether to build rentals for sale or long-term rental income, location is key. Market research is essential to identify target demographics. For example, single houses tend to thrive in city centers or near educational facilities, while 3-roomed houses with compounds are preferred in the outskirts of the city in areas like Nalya, Namugongo, and Entebbe.

Pros and Cons:

Building Rentals to Sell:

  • Pros: Immediate lump-sum profit, reduced involvement in property management.
  • Cons: Limited long-term income, potential capital gains tax.

Building Rentals to Rent Out:

  • Pros: Steady, long-term rental income, potential property appreciation.
  • Cons: Initial investment in property management, occasional vacancies.


Conclusion and Recommendations:

In conclusion, the decision to build rental properties in Uganda ultimately depends on your financial goals, risk tolerance, and market analysis. If you prioritize immediate profit and have a higher risk tolerance, selling may be the right choice. However, if you seek steady, long-term income and are willing to manage properties, renting them out could be more suitable.

It’s crucial to stay informed about legal changes, market trends, and location-specific factors when making this decision. With the new Tenants Bill 2023 addressing regulatory issues, the rental market may become a more attractive option for long-term investors.

Remember that both options have their merits, and it’s advisable to consult with real estate professionals and conduct thorough research before making your final decision.

Additional Resources:

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When President Yoweri Museveni visited Joseph Ssebugenyi’s farm in February, what he saw was the peak of over 14 years of focused work. Yet the successful Ssebugenyi became a farmer almost by accident, because of an insult. Oryomushuma (you are a thief), a man who had brought potatoes for sale in the market told him.

It was early 1995 and Ssebugenyi was a small-time fresh foods seller in Owino market. The man insulted me because I had picked one of his potatoes. But this insult changed the course of my life, he says. The insult was too big for the then 40-year-old and father to over 7 children, that when he went back to his home that day, he sat and evaluated his life. He was not satisfied with the meagre money he made. It was barely enough for me and my family to survive on, he says. He was making an average of sh2,500 per day. And this had to be shared with transport costs from his Kanyanya home, a Kampala suburb, to the city where the market was. That night, he decided to abandon hawking the heaps of fresh foods and start farming. My friends laughed loudly when I told them about my plan the next day. They said I would never make it in agriculture because I had no capital, Ssebugenyi says.

He keeps quiet momentarily, then boasts about the cool air in the sitting room of his newly furnished house. Gesturing at the fan and then at the smooth cemented floor, he says, These are the fruits of my hands. This house came from the farm. When he decided to leave Kampala for his village back in 1995, he only had a deserted old house to go to. He had left it when he was fleeing the 1982 bush war. I came with nothing from the city apart from a black coat, a trouser, a shirt, two slashers and a hoe, he says. He also had a small saucepan that trebled as a food pan, a kettle and a saucepan. I did not even have a sh100 coin to transport me from the trading centre (Kasana-Kikyusa) to my village in Bulemalwogi when I came, he remembers. When he finally reached home, he found the place was infested with snakes and other reptiles, and the grass overly grown. He had not bothered to visit it regularly because, รขโ‚ฌล“I did not think I would ever return. My initial evaluation was that I would not manage.

I tried to plot a way back to the city, but had no money. I had no way out but to work, he says. And that involved slashing overgrown grass, evading snakes and other reptiles, encountering stingy insects, a daunting task. He had five acres of land under coffee and had returned to renovate the coffee garden and earn from it. I vowed to clear at least five coffee trees daily. The first days were difficult, but after two weeks, I had made a routine, he says. The garden had been planted way back in the 70s but had been abandoned during the war years. The coffee trees had grown wild and had become a forest of sorts.

He worked himself so thin that people thought I had AIDS.The tongues had been wagging already: Wherever I passed, I could here them say, Laba oyo ekibuga kyagaana, (see that failure from the city) but it did not deter me. By the end of 1995, when he was almost clearing the entire five acres of coffee, the coffee season began and he unexpectedly started to earn money.

It was difficult to believe that the forest I had neglected for so many years was now paying, he says. But even before the harvest, he had already identified another enterprise – pineapple growing. I had seen other people in the village dealing in pineapples and also wanted to invest in them, he says. He did not have any money to invest though. His coffee would only start to bring money in November. He turned to friends for assistance: I had cleared over an acre ready for the first pineapples, so I went out and started begging for suckers (plantlets), he says. Some people gave him as little as 10 suckers while others gave him more. He planted and had to wait for another 18 months before he enjoyed his first harvest. Today, he gives out suckers too; keeping heaps and heaps of them lying around his shamba.

He now has 12 acres under pineapples within each acre containing over 12,000 plants. In total, he has 20 acres under commercial agriculture. In the coming season, he expects to harvest at least 140,000 fruits and sell them at an average of sh700 each. Ssebugenyi also has over 800 plants of bananas that he commercially maintains, which he turned to when the coffee wilt attacked most parts of the country in 1997, including his garden. I had to look for another enterprise to replace the reducing coffee fortunes, he says.

At any one time, there are at least 100 bunches of matooke, ready for harvesting. We sell each of them at around sh5,000,he says. And this is only because he does not have his own transport to take them to Luweero market or Kampala. Ssebugenyi also maintains 5 cows. Two of these were donations from in-laws when two of his daughters introduced their fiances. He bought the other three. He keeps some milk for domestic consumption and sells the rest. Ssebugenyi cherishes his farm, which he calls my office. I make sure I visit my office before doing anything else, he says. It is not surprising that he knows every part of his 20 acre farm like the back of his hands. Go and harvest the bunch from the other end, he tells one of his workers. He adds, But not Nakabululu. Knowing your office makes work easier. That is why I make sure that I know every inch of this farm, he says. As age slowly catches up with him, he is venturing into another field – planting hard-wood trees for timber.

When he had just come back on 1995, he planted several musiizi trees. The 13-year-old trees are now tall and can produce at least 30 pieces of timber each. He wants to plant more of them. When the NAADS programme started in Luweero in 2000, Ssebugenyi was one of the village farmers selected to benefit from the programme. NAADS, he says, has been instrumental in giving him and his workers more skills. A NAADS coordinator, Dr. Kazibwe, regularly comes to visit and advise me, he says. His success has since attracted other groups including CARITAS. Challenges It has been challenges through and through for Ssebugenyi. Lack of capital, poor markets, pests and diseases have at any one time affected his progress. I did not have capital to start with, but overcame that by using the available resources, he gestures around while adjusting his sombrero.

Land is a very big capital that so many people do not know how to use. I had this land and used it to become who I am today,he adds. There is also a scarcity of casual workers to plough the farm. At any one time, I need at least six people on the farm. But workers are very rare, he laments. He also had a transport problem which has since been solved with the gift of a truck from President Museveni. Achievements He is cagey about how much he earns annually and only says he counts his earnings from what he has been able to do. This house is entirely from that farm, he says.

It was constructed through an initiative by the then bishop of Luweero diocese, Cyprian Kizito Lwanga. They required that a person pays 50% of the cost through the church. I was the only one who qualified because I had backing from my farm, he says. Ssebugenyi has also been able to educate his children through university. One did computer technology, while the other did accounting, he says. Land is capital. People should realise this and use it to fight poverty,he says.

Story Credit: Joshua Kato

Source: NewVision Uganda

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THE SECRET TO FINANCIAL STABILITY: An Introduction to Land Banking and the Inspiring Story of Fahad Bruhan Jr.

Land Banking is a Real Estate investment strategy that involves purchasing land with the intention of holding onto it for a long period of time. The idea behind land banking is that the value of land will appreciate over time, providing a profitable return on investment. In this blog post, we’ll explore the definition of land banking, its importance, and an example of land banking in Uganda.

Definition of Land Banking

Land banking is the process of buying undeveloped land in anticipation of future development. This land is typically located in areas that are expected to experience significant growth and development in the future. Land banking involves purchasing land and holding onto it until the value of the land increases, at which point the land can be sold for a profit.

Importance of Land Banking

Land banking can be a lucrative investment strategy for several reasons. First, land is a finite resource, and as populations grow, the demand for land increases. This means that over time, the value of land tends to appreciate. Second, land banking can provide a hedge against inflation. As the cost of living increases, so does the value of land, making it a valuable asset to hold onto. Finally, land banking can be a relatively low-risk investment compared to other forms of real estate investment. Unlike rental properties, land does not require maintenance or upkeep, making it a passive investment.

We take a story from Fahad Bruhan Jr

“Few days back, I was talking to someone who bought a plot in early 2010 in the outskirts of Kampala for 7m. The intention was for construction, however challenges came along. The person held on the plot. Right now, similar plots in that area go for more than 40m.

Land banking as the word says, is putting (investing) your money in land for 1- safety, 2- growth, in value as an investment. You buy land usually in big chunk, hold and dispose with the intention of making profit.

Most real estate companies selling plots are in the land banking business at large commercial scale. They buy a big chunk of land, usually in acres, then plan an estate, plot the land, either sell immediately or hold for sometime then sell.

Land banking is one of the safe, low risk investments for people who have the financial capacity – cash saving – but don’t have the time, maybe because they have full time jobs, or they don’t want to take on the high risk investments like business for whatever reasons.

You don’t have to be or own a company to invest in land banking. You can invest in land banking as an individual or a group.

The person I was talking to few days back who bought a plot for 7m Ugx, held their money safely (banking) in land. If they decide to sell the plot at a future time (right now for more than 35m), they’ll earn a profit, that is Land Banking at individual level.

This is supposed to be a blog post. I mean a long post!

Approaching Land banking as an Investment.

As an Individual.

If your someone who is having a stable, good paying job, and have some extra saving which is not allocated for anything in particular, Instead of keeping the money in the bank which is risky interms of inflation and accessibility, invest in land banking by buying land/plots.

Identify lands/plots in your financial capacity – saving rate, in areas with growth potential. Then save your money in the land and let it grow in equity.

I have never bought land for building personal house, I don’t have the capacity yet, I also don’t think it’s a wise use of money for me as an individual. However I have invested in land banking at individual level.

As a Group.

One of the challenges for people wanting to go into land banking is capital. Most of us don’t have the financial muscle to invest in land banking as individuals. We can do it as a group.

The group can be trusted friends, a Sacco, an Investment Club through Collective Investment Scheme – CIS. One of the investment clubs I belong to has holding in land banking.

As a group, investment club, sacco, when you’re going to invest in land banking, it has to be a decision from onset, with clear entry strategies and a long term one. Land banking is a long term play.

Have a discussion on the idea as group members, agree to pull financial resources together for a certain period of time while identifying and acquiring lands with good future potential.

Key Pointers to Consider When Investing in land banking.”

To be continued..,

Disclaimer: This is not an investment advise.

Story Credit: Fahad Bruhan Jr

Land banking is a real estate investment strategy that involves purchasing land with the intention of holding onto it for a long period of time. Land banking can be a lucrative investment strategy for several reasons, including the finite nature of land, its potential to provide a hedge against inflation, and its relatively low risk compared to other forms of real estate investment. In Uganda, land banking has become an increasingly popular investment strategy, with the Mukwano Group being a prime example of successful land banking efforts in the country.