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“Poor construction of some buildings without lifts or with the lifts but unreliable power supply has contributed to the reduction in their demand,” he said.
According to Knight Frank, property rent in prime industrial areas has stagnated during the same period under review.
The average rent is $5-$7 per square metre for properties in the traditional industrial areas and $5-$6.5 for newer, more modern warehousing premises in secondary industrial locations of Nakawa, Ntinda, Luzira, Namanve, and Seeta.
Similarly, the demand for industrial rental property in the traditional industrial areas within and around the CBD and secondary industrial locations like Banda, Ntinda, Nakawa, and Kyambogo experienced low occupancy rates and take-up over the past six months as supply of warehousing outstripped demand.
It comes at a time when trade in imported goods and commodities that would require storage space for distribution to the neighbouring states is slowing down.
“It is without a doubt, to a certain extent, that the regional peace and stability affects how well the Ugandan economy will do,” Rugasira says, “The political unrest in South Sudan and Burundi has impacted on trading volumes which has had a knock on effect on demand for warehouse space.”
South Sudan accounts for 15% of Uganda’s total exports and the persistent civil conflict there, which first erupted in 2013, has resulted in a decline of exports from $518.7million in 2012 to $400million in 2014, according to the Bank of Uganda.
Rugasira adds that the high commercial interest rates on the market, currently averaging 24.5%, are a deterrent to prospective homeowners and have led to loan defaults in the mortgage market. There has recently been a flurry of foreclosures on mortgaged properties by financial institutions.
Barclays Bank has announced plans to auction J&M Airport Road Hotel Apartments and Leisure Centre Ltd and the associated properties to recover approximately Shs4.7billion ($1.4million) advanced for completion of the facility in 2005.
In May Centenary Bank announced plans to auction various properties including estates in Mbarara and Mukono, among others, to recover loans worth Sh2.4billion ($707,965).
The residential segment witnessed an increase in the number of properties for sale mainly in the Kampala metropolitan areas of Kira, Kireka, Naalya, and Najjera that are becoming popular for middle income earners.
The Private Mailo tenure system, considered to be safe for home owners as opposed to leasehold title, contributed to a surge in demand for commercial and residential property investments for both local and foreign expatriates in these areas.
Rugasira says there are also various middle income housing development schemes and satellite towns in the offing that could address and alleviate the housing deficit if the right product is built and priced correctly.
Property developers have previously shunned investing in low cost housing arguing that investment in that segment is only commercially viable if they build many semi-detached units and the government offers incentives towards setting up other infrastructure including roads, water and electricity in the estates.
Uganda’s housing deficit currently stands at 1.2 million units, according to National Housing and Construction Company, with Kampala alone estimated at 750,000.
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editor@independent.co.ug
The issue of charging Ugandans in dollars should be addressed very fast. Starting with Government bodies like UCC