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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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Nembabazi Real Estate Ltd is your one stop partner for your Real Estate needs.


Welcome to Nembabazi Real Estate Ltd, your trusted partner for all your real estate needs in Mbarara City and beyond. We take pride in offering a wide range of real estate services that cater to both buyers and sellers.

Our Services:

  • Buying and Selling: Looking for the perfect piece of land? We specialize in commercial, residential, and farmland transactions, ensuring you find the right property for your needs.
  • Property Management: Trust us to handle the complexities of property management, so you can focus on what matters most to you.
  • Rentals: Need a house or office space for rent? We have a variety of options to suit your preferences and budget.

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🏢 Location: Iqra Building, Rooms 15 and 16, Ntare Road, Mbarara City.

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  • Phone: +256 702 050 601
  • Phone: +256 771 091 122
  • Phone: +256 758 331 705

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Explore our services and discover the perfect real estate solutions tailored just for you. Whether you’re looking to buy, sell, rent, or manage property, Nembabazi Real Estate Ltd has you covered.

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Mbarara City: The Emerging Real Estate Hub in Uganda

Welcome to Mbarara City, an exciting and rapidly growing real estate hub in the heart of Uganda. With its strategic location, booming economy, and abundance of investment opportunities, Mbarara City has become a magnet for individuals and businesses looking to capitalize on the region’s potential. In this blog post, we will explore the key factors driving the growth of Mbarara’s real estate market and delve into some compelling examples and references that showcase its rising prominence.

Strategic Location and Connectivity:
Mbarara City’s advantageous geographic location plays a pivotal role in its emergence as a real estate hub. Situated in southwestern Uganda, it serves as a gateway to the Great Lakes region, connecting major cities like Kampala, Kigali (Rwanda), and Bujumbura (Burundi). The city’s proximity to national parks, including Queen Elizabeth National Park and Lake Mburo National Park, adds to its allure, attracting tourists and investors alike.

Economic Growth and Development:
Mbarara City has experienced significant economic growth in recent years. The region’s diversified economy encompasses agriculture, trade, services, and industry. Notably, Mbarara is a major center for milk production, with several dairy processing plants fueling employment opportunities and economic development. The city’s growing middle class and increasing purchasing power are driving demand for quality residential and commercial properties.

Infrastructure Advancements:
Investments in infrastructure have played a vital role in Mbarara City’s real estate boom. The recently constructed roads like the Mbarara Northern Bypass , the ongoing expansion of the road network including Victor Bwana Road, etc has enhanced connectivity and reduced travel time to and from the city. Additionally, improvements in electricity supply and internet connectivity have created a conducive environment for businesses to thrive.

Residential Real Estate Opportunities:
Mbarara City offers a wide range of residential real estate opportunities to cater to varying budgets and preferences. From affordable housing projects to luxury apartments and gated communities, the city’s real estate market is becoming increasingly diverse. For example, the upcoming Rwizi Apartments by National Housing and construction Company offers modern, eco-friendly homes with state-of-the-art amenities, providing a comfortable and sustainable living experience.

Commercial and Investment Potential:
Mbarara City presents lucrative opportunities for commercial real estate and investment ventures. The growing population and thriving business environment have spurred the demand for office spaces, retail outlets, and hospitality establishments. The establishment of several shopping malls, Mbarara Central Market and Mbarara Industrial Park has also attracted businesses and industries seeking to leverage the region’s economic potential.

Portville Shopping Mall located in Mbarara city center

Mbarara City is fast becoming a real estate hub in Uganda, offering a compelling blend of strategic location, economic growth, and infrastructure development. With its diverse residential options, commercial potential, and investment opportunities, Mbarara presents an enticing proposition for both local and international investors. As the city continues to evolve and expand, now is the opportune time to explore the thriving real estate market in Mbarara and capitalize on its emerging potential.

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Buying land or a house in Uganda can be a complex and challenging process, especially if you’re not familiar with the local real estate laws and regulations. To help you avoid some of the most common mistakes people make when purchasing property in Uganda, we’ve put together this guide. Here are 10 mistakes to avoid, along with some possible solutions.

Not doing enough research: One of the biggest mistakes people make when purchasing property is not doing enough research. This can include not researching the local real estate market, not checking the zoning laws, and not looking into the history of the property. To avoid this mistake, make sure to do your due diligence and research the property thoroughly before making an offer.

Not getting a professional inspection: Another mistake people make is not getting a professional inspection before purchasing the property. This can lead to hidden problems, such as structural issues or hidden damage that can cost a lot of money to fix later on. To avoid this mistake, make sure to hire a reputable inspector who is familiar with the local building codes and regulations.

Overlooking the property’s location: Location is crucial when purchasing a property. It’s important to consider factors such as proximity to schools, shopping centers, and public transportation. Overlooking these factors can lead to dissatisfaction with the property in the long run. To avoid this mistake, make sure to carefully consider the property’s location and whether it meets your needs and preferences.

Not considering future needs: Another mistake people make is not considering their future needs when purchasing a property. This can include not thinking about potential family growth or changes in lifestyle. To avoid this mistake, make sure to consider your future needs and whether the property will still meet those needs in the long run.

Failing to budget properly: Failing to budget properly is a common mistake. It’s important to consider not only the purchase price of the property but also the ongoing costs such as property taxes, utilities, and maintenance. To avoid this mistake, make sure to create a comprehensive budget that includes all of the potential costs associated with owning the property.

Not understanding the land laws: Uganda has complex land laws, and failing to understand them can lead to legal problems down the road. To avoid this mistake, make sure to consult with a reputable real estate attorney who is familiar with the local land laws and regulations.

Not understanding the NEMA laws: The National Environment Management Authority (NEMA) has regulations that govern the development and use of land in Uganda. Failing to understand these laws can lead to legal problems and fines. To avoid this mistake, make sure to familiarize yourself with the NEMA laws and regulations, and consult with a reputable environmental consultant if necessary.

Not getting proper documentation: Failing to get proper documentation, such as a land title or building permit, can lead to legal problems and disputes over ownership. To avoid this mistake, make sure to obtain all of the necessary documentation before finalizing the purchase.

Not negotiating properly: Failing to negotiate properly can lead to overpaying for the property or missing out on a good deal. To avoid this mistake, make sure to do your research on the local real estate market and work with a reputable real estate agent who can help you negotiate the best price.

Not working with a reputable real estate agent: Finally, not working with a reputable real estate agent can lead to a number of mistakes, including not getting the best deal, not understanding the local market, and not having access to all.