Uganda’s real estate could be a time bomb

I have had numerous conversations about Ugandan’s real estate sector because am a very small player in the field and I have since lost all the desire to grow in the sector. Let me make my case. Anyway, most of the conversations have hard have ended in disagreements about real estate. So today I may get emotional in my write up, I may not necessarily be a classical economist or Keynesian. But I see a real estate problem for Uganda on the horizon and I want to point it out before it’s too late. Today I will go against Hyman Minsky and his stabilizing the unstable economy.

In Uganda, we have one of the best land systems in the world. However much we are taking that gift for granted. In Uganda the masses own land. Which is not so common worldwide.

After university and one has a job, the first thing that will be done in normal cases is to buy land and put up a house. That is magic to people in the USA or Britain the civilizations that are worshiped today. Subsequently, one can then further buy land have a title deed, and then initiate a small real estate venture of small houses. Sometimes our parents give us land since it’s a custom that has been passed on for thousands of years and we decided to develop the land to ensure that our children and those that will come after them will have means to survive.

Today the financial institutions have devised means to help Ugandan’s have property faster, at least that is how they package the crap. After 6 months of a 4-year contract, one can secure a loan from debt merchants that’s what banks are to put up any kind of residence or estate in the bid to have future monetary security of some kind. Can you imagine at 30 we are landlords and landladies in Uganda, I will not overlook the 1% who get property from parents. Then there is a crop in the Arab world sending  back money from the sand to invest in housing.


It’s a good thing for the economy because real estate is very vast and employs very many people. From construction to modern security systems to electrical fittings and water. In fact, our tourism is also partly base on real estate, have even seen schools rent property and medical center so in real estate we have education and health in there and other sectors.

Today most investment clubs have real estate as number one project then agriculture follows but still they will be growing trees to be used in construction. So real estate is taken as safe heaven in Africa maybe because booms have not yet come raining down like in Syria, I feel for landlords in places like Latakia. It’s not true that when you have rentals you are safe at all.

For starters, if you can’t have a house the size of your parents home at half the price they constructed theirs you went to school for nothing. Yes, if you can’t agree with this then already you are messing and will never have a return on investment. I have talked to a number of owners of construction companies about cheap housing and they have sent me parking. A good childhood friend told me “maybe If we are going to use mud” so there is already a mindset that that will cause the housing bubble in Uganda. We are not being innovative enough.

Sometimes I want to think we were young when 2009 happened and have forgotten that the economic depression then was caused by real estate. Back then price-to-rent ratio peaked at the end of 2006, reaching the rather remarkable level of 14.5, clearly implying the truth of a “bubble” in residential housing. Home prices were at levels far higher than justified by essential values. In the USA and the effects when to on be felt world over causing a -1% meltdown that we called the credit crunch.

A housing bubble is a type of economic bubble that occurs periodically in global markets. It is indicated by sudden the boosts in the valuation of real property such as housing until they reach unsustainable levels comparable to income and other economic aspects.

The residential real estate price rise that began in 2000 had a number of important side effects. When the value of housing rises, it creates wealth and wealthier people consume more. This consumption-wealth effect is significant. The easiest way to transform housing wealth into consumption is to borrow.

As we venture into the property arena we have to change our methods a cause a market shakes up or we are going to make the same blunders that were made in the past. We have to put away the high-end expensive kind and work around the box to find cheaper modern ways of structures that we work with. We have a relatively inconsistent economy that is not regulated by the government when it comes to real estate. I was surprised one day when I discovered that sand dealers enjoy about 150% profit and this is because through the real estate sector there is a level of secrecy that is not healthy for the market. We have to champion transparency to make the sector sustainable.

Landlords and landladies are known not to be flexible, now we have a self-induced economic depression caused by a pandemic but they want to earn normally because they have loans to pay. But they have to adapt to the situation. They like other businesses have to renegotiate the terms of loan repayment change the rent collection means. In January when parents are taking back children to school have found it effective to have rent be paid weekly because at the end of the month parents only think of education for their kids. If you own 8 units it’s not attainable to charge the same amount of rent in Uganda, otherwise, you, will always have empty houses and you won’t be gaining a penny but you will have costs to meet at the end of the month.

I have dealt with landlord and landladies as an agent who will have their property entry for 18 months because they don’t negotiate rent fees, and during that time they don’t service their loans, this hurts the earnings of the bank which will maybe have to do away with some costs in terms of the wage bill, and this is all over Kampala. Buildings both residential and commercial are being inhabited by rats for years because they are too expensive. We all know global travel may take years to recover and we also know Airbnb in Uganda depends on foreigners what do we do to our houses then to fit in and continue earning something.

If we don’t soul search and put up modest residential houses, we are going to end up getting bigger salary loans that take longer periods of time to be paid back and time is money.

There may be no generally accepted definition of a financial crisis but always a disruption in the financial markets will be apparent. When the flow of credit to households and business is impeded and the real economy of goods and services is adversely affected. We are either undergoing one or headed for one and if we don’t adjust to the changes then our houses may become useless in the end.

I well know how useful real estate earning are and how vital it is to our economy but are we on a time boom.

9 thoughts on “Uganda’s real estate could be a time bomb

  1. As a person desiring to build my house, this has been very good information. Some shocking details in there too. I can tell you’re passionate about the topic.😊

    Liked by 1 person

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