Uganda’s property market has continued to show signs of recovery in the retail and office sectors, amid concerns over high interest rates and volatility of the shilling.
Retail performance, according to crane management services, remained vibrant during the first half of the year, with most shopping places registering more than 90% occupancy.
“Food, fashion and entertainment have been the biggest tools in driving demand for the shopping malls around Kampala, but the weak shilling may negatively impact on this sector,” said Ibrahim Juma, property manager, crane management services.
Demand for office space in the central business district and its outskirts also slightly increased, although rents on the other hand continued to fall due to the increase of total office space in the market.
In 2013, the property market went through an acute depression because of interest rates that had shot up to 30% forcing many developers to shelf their investment plans.
“2014 registered an improvement for rental properties, as more people preferred to rent instead of buying property,” Juma said.
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The high expectation in the future of the industry, according to Juma, is what has led the crane management services to invest more than $50 million (about shs 183b) in property development this year.
“We have several sites across Kampala and Entebbe which are almost complete and next year we also intend to invest another $50 million in real estate development,” he said.
According to Judy Rugasira, the Knight Frank managing director, office take up is beginning to show signs of recovery following a troubled experience in 2013.
“The increase in supply and development, and the refurbishing of existing supply is exerting downward pressure on office rents, but yields are still quite high at around 8% to 10%,” Rugasira said.
She added that demand for prime residential accommodation for apartments and town houses reduced significantly in the first half of the year.
Also, she said there has been a noticeable market correction in residential property prices while demand remained strong for redevelopment properties in this sub-sector.
According to the global property guide, an online site that Compares countries on the basis of rental yields, taxes and investment prospects, rents in Kampala go for about $6 (about shs 22,002) to $8 (about shs 29,336) per square metre (sq. m) per month.
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