Real Estate Sector Profile of Uganda
Contribution to the economy
According to Uganda Bureau of Statistics (UBOS), the sector on average contributes about 7.5 per cent to Uganda’s GDP. Uganda’s current housing stock is estimated at 5.28 million housing units with an average household size of 5 persons. The national occupancy density is estimated at 1.1 households per housing unit.
Key Players in the sector
MLHUD in responsible for providing policy direction, national standards and coordination of all matters concerning lands, housing and urban development and putting in place policies and initiating laws that ensure sustainable land management, promote sustainable housing for all and foster orderly urban development in the country. The Department of Housing Development and Estates Management is responsible for formulating policies, legislation, procedures on Estates, supervising housing development and Estates Development.
The 1995 Constitution clearly states that land belongs to the citizens of Uganda. The Constitution gives government power to suppress or limit undesirable land use in the interest of public welfare and/or orderly development without revoking ownership interests or rights.
The Land Act provides for the efficient utilization and management of land.
The National Land Policy approved by cabinet in 2013 provides a framework for articulating the role of land in national development, land ownership, distribution, utilization, alienability , management and control with the aim of transforming the country from peasant society to a modern, industrialized and urban society. The policy covers the following key issues;
- Land in the national development framework
- The constitutional and framework
- The land tenure framework
- The land use and management framework
- The regional and international framework
- The land rights administration framework
- The policy implementation framework.
- The national land policy framework is essential for the sustainable management of land resources as land is crucial for the economic development of the country.
National Housing Policy 2016
The National Housing Policy is framework for promoting progressive realization of adequate housing for all. The policy addresses following various issues and challenges that face the housing sector;
- Problems of inadequate housing and housing backlog arising from inadequate house construction and the increasing population as well as growing housing demand;
- The deterioration in housing condition as manifested in overcrowding, development of slums and proliferation of informal settlements characterized with lack of basic infrastructure and services within virtually all the urban centers.
Objectives of the Policy
- To increase the production of adequate housing for all income groups, from the current 60,000 to 200,000 housing units per annum to meet the housing need by 2022;
- To improve the quality of the existing housing stock;
- To promote efficient utilization of energy and other resources in housing;
- To increase access to affordable housing;
- To improve security of land tenure;
- To improve the mechanisms for development and management of real estate industry;
The major target of this policy is to reduce the housing backlog currently estimated at 1.6 million housing units (1,390,000 and 210,000 in urban and rural areas respectively). The aim is to progressively increase the production of new houses from the current annual estimate of 60,000 units to a new level of 200,000 units annually by 2022.
The Draft Landlord and Tenant Bill 2016
The draft Bill seeks to regulate the relationship between a landlord and a tenant and seeks to repeal the Distress for Rent (Bailiffs) Act (Cap 76) and the Rent Restriction Act (Cap 231).
- Rent is to be charged and paid in shillings unless otherwise provided under any law. However the Bank of Uganda Act (Cap 51) permits transactions to be in other currencies other than the Uganda Shilling;
- The draft Bill seeks to cap rental increases to a rate of six percent (6%) annually or such other percentage as may be prescribed by the Minister and rent shall not be increased within the first twelve (12) months of the tenancy;
- Rent payable in advance is restricted to three (3) months unless a tenant opts otherwise;
- The draft Bill seeks to abolish the remedy of distress for rent. If a tenant fails to pay rent and is in arrears, a landlord is prohibited from locking the premises and must apply to court to recover the rent and
- A landlord will be required to pay for all initial installations costs and charges of electricity, water, gas or oil supply and all utility charges that are not separately metered.
The Bank is a pioneer in mortgage lending and is a leading mortgage provider.
Uganda Society of Architects
The Uganda Society of Architects (USA), brings together architects in Uganda to regulate building standards in the building construction industry.
Ministry Of Works Central Materials Testing Laboratory
The laboratory tests the quality and safety of building materials used in construction. There is a bit of delays at laboratory because it is understaffed, underfunded and inadequately equipped.
Demand for accommodation
Demand for quality accommodation within Kampala City has remained strong for a number of years due to the growing urban population and increasing number of people falling in high income bracket. Demand for affordable quality accommodation remains high in residential suburbs within close proximity to the City centre and the demand is largely driven by increasing number of employees working for both private and public sectors. Kampala residential market has had low supply and a consolidated relatively high level of demand which has created high passing rentals in the perceived desirable locations. This situation has improved tremendously with better quality and better thought out schemes coming onto the market in the past 15 years. There remains however a shortage of decent quality and affordable housing both for rent and outright sale.
Housing Deficit in Uganda
Uganda’s residential housing deficit currently stands at 2 million units and continues to grow by 300,000 units per year. According to NHCC, by 2020, the housing requirement in Kampala will be at 750,791 units, other towns 1,092,318 units, rural areas 8,482,889 units and nationally 10,325,990 units.
Summary Of The Housing Requirements by 2020
|Estimated backlog 2009
|Estimated replacement needed
|Estimated upgrading needed
|Projected requirements by 2020
|Other Towns||92, 730||37,092||46,365||1, 092,318|
|Rural Areas||532, 468||106,494||1,064, 935||8,482,889|
|Nationally||707, 382||169,885||1,144,174||10, 325,990|
Source: National Housing and Construction Company
A number of properties for office space and business accommodation have been developed mainly in Kampala Central Business District. This has partly led to the falling of Commercial rental levels throughout Kampala following an oversupply in the short to medium term period . The oversupply is mainly caused by the slowdown of the economy over the past few years. The rent per m2 has declined from range of US$ 14.5 to US$ 18.5 in 2010 to US$ 10 to US$ 14.5 in 2016.
A number of properties for accommodation , office and business accommodation have also mushroomed in upcountry urban centers.
Demand drivers in the sector:
- Rapid urbanization and the setting up of new districts and town councils;
- Improvement in standards of living both in urban and rural areas;
- Rising disposable incomes that have enabled Ugandans to invest in better housing;
- Increase in Foreign Direct Investment (FDI);
- Uganda Diaspora remittances (Personal Transfers) and
- Increase in the number of international organizations, foreign mission, nongovernmental organizations, international businesses and trade organizations resident in Uganda.
- Inadequate investment;
- Inadequate housing both in rural and urban areas;
- The current estimated level of construction at 60,000 housing units per year is too low to satisfy the current estimated need of 200,000 housing units per year.
- Low income level of household estimated at US$ 150 p.a. (the Uganda National Household Survey 2012/13.
- The increasing population has pressure on housing and other related basic infrastructure and services
- High urbanization rate of 5.43% per annum
- Lack of institutional/employer housing
- Inadequate supply of affordable building materials on the market.
The information on the real estate sector is laid out as follows;