The last three years have been tough for Uganda’s real estate sector.
A combination of high commercial bank lending rates, land wrangles, and a dip in the public’s purchasing power, has hurt the sector in all sorts of ways. Anatoli Kamugisha, the Managing Director at Akright, one of the bigger real estate companies in the country, knows how difficult life has been.
“The past three years have been tough. The lending rates remain high and people are extremely poor,” Kamugisha said.
Complaining over the unending land wrangles, he added that it was “extremely hard to acquire land.”
For that, solutions from the private sector are being fronted to support the housing sector. One of the institutions playing its part is KCB Bank Uganda. The bank, one of the leading mortgage financiers in the region, has organised a trip for its real estate developers group members to Turkey and Dubai at the end of this month.
According to David Nyende, the KCB Uganda Director, the trip is geared at helping East African developers to get exposure to low-cost building techniques from the developed countries. Turkey was chosen for its history in architecture while Dubai is known for unique housing.
It is easy to see why KCB is keen on Uganda’s housing sector. For starters, the country continues to experience a shortage in housing units. The Uganda Bureau of Statistics report for 2012 indicated that Kampala had a housing deficit of close to 600,000.
This shortage is partly brought by the trend that property developers built for the high or middle income class, completely locking out the poor. Celestine Mindra from Housing Investments Limited says the reason why they prefer to cater for the high end is simple:
“The challenge is that the margin between construction of a low-value house and high-value house is small. That is why many developers concentrate on high value houses and leave out the low end Ugandan.”
Government wants to change this attitude. The government is encouraging private property developers to come up with cheaper units, especially given the rural urban migration, to deal with Kampala’s property demands. Banks like KCB are expected to finance these ventures.
Kamugisha and Mindra will be part of more than 50 Ugandans, supported by KCB, to Dubai and Turkey to learn about new construction technologies.
“Our sector is growing fast. We expect our members to get inter-linkages and trading partners and also learn techniques of building spacious but low-cost houses,” Albert Odongo, KCB Uganda managing director, said.