Who are the overpriced condos in Uganda’s real estate market built for?

Kampala, Uganda | THE INDEPENDENT | Prospects Real Estates Agency has been running an advert of condominiums in Najjera-Buwatte on its social media pages: UGX 399 million for 3 bedrooms with 2 bathrooms, UGX 299 million for 2 bedrooms with 2 bathrooms and UGX 199 million for 1 bedroom with 1 bathroom.

Such adverts are increasingly common from real estate dealers, indicating that some developers are moving from building rentals to condominiums.

But is the real estates market shifting towards condominiums? Research is hard to come by given that real estate dealers except Knight Frank, don’t publish market insights of performance of properties they manage.

Fiona Nshemerirwe Kabwama, the general manager of Uganda Housing Cooperative Union, an organization that brings together housing cooperatives and helps members access decent and affordable housings argues that a one-bedroom condominium costing 200 million shillings is largely unfordable and could be targeting the wrong market.

“Statistics show that we have a housing deficit of 2.4 million housing units, and yet when you look at the cost of apartments that have been built recently, you wonder who is going to occupy these houses!” she queried in an interview recently.

The problem of housing, Nshemerirwe argues, is compounded by the fact that what is provided on the market isn’t responding to the actual needs given that 60 percent of greater Kampala residents are low income earners who certainly can’t afford a 100 million condominium.

Nshemerirwe says the problem of mismatch between developers and tenants extends to high rise office buildings in the middle of the city that have failed to attract tenants for a long time. Church House is one classic example. Church of Uganda borrowed money for Church House building which it has failed to pay because it couldn’t attract tenants. The church has turned to fundraising to raise money to pay the loan.

But Kyeyune Ssewajja, a real estates manager at Avarts Housing Limited says real estates developers shifting toward condominiums is an indication that there is market given that the market is dictated by forces of demand and supply. If there were many condominiums on the market that supply outstrip demand, the price would drastically go down.

There are benefits for developers in setting up condominiums. “The developers are going into condominium properties so that they can sell, get their money and invest again,” he says.

Condominiums, he says help developers to bring down the cost of houses. In a place where a developer would have put up a big structure costing 10 billion shillings and can’t get buyers quickly, he or she builds condominiums which can be sold quickly. “What condominium does is breaking down the cost into smaller affordable units,” he argues.

Most developers investing in condominiums, Sserwajja says are foreigners who come with their capital ready to invest and recoup their investments quickly and re-invest again.

Technical and elaborate as the explanation by the Avarts Housing Limited management, others understand the real estate market very differently. These believe that skyrocketing prices in Uganda’s real estates sector is heavily influenced by corruption, people steal money and invest in the sector by buying properties at any price.

Apollo Buregyeya, a lecturer at Makerere University College of Engineering in a recent interview said stolen money is a problem because it has no value. People with it invest recklessly.

“Where money is, it should be balanced with value. When you have money and you don’t have value, you don’t have a relationship with commerce. We end up having misallocation of capital,” he argued.

*****

URN