Uganda is currently (2024) politically unstable, with limited infrastructure and resources. However, these challenges merely hold the ground in determining your choice to invest in real estate in Uganda.
The soaring demand for real estate investment opportunities in Uganda has gained traction from both citizens and non-citizens.
The demand is one of the key contributing factors to the growing real estate market in Uganda, which is projected to record a CAGR of 5.23% between 2023 and 2028. Which opens an opportunity to consider investing in this field.
And if you are wondering whether this is the right time to invest in real estate In Uganda, you have two reasons to base your decision on.
According to TheAfricaInvestor, 2023 alone bears the potential to drive market growth by a 5.7% CAGR towards the end of the year. Additionally, Uganda’s economy is expected to skyrocket in the next five years, increasing by 29.4% (5.9 GDP).
Besides, there are various lucrative real estate investment opportunities to grab, presented by the fast-growing economy.
This article discusses the various ways to invest in real estate in Uganda and why you should consider it. You will also tap into available plots of land for sale in Uganda.
Let’s dive in!
7 Ways To Invest In Real Estate In Uganda
Many people ask, what is the most profitable real estate to invest in? Where can I invest to get returns?
The truth is, that Uganda’s real estate market is wide enough to accommodate everyone and help them reap their desired profits.
So, if you want to invest in Uganda, here are the seven real estate investment opportunities to consider.
1. Buying Residential Property
Buying residential property is one of the most profitable investment opportunities in Uganda. Residential properties, including houses, condominiums, and apartments, offer opportunities for rental income and long-term economic growth.
Uganda’s growing population and fast-paced economic growth have contributed to a rising demand for housing. Whether you buy a multi-unit apartment or a single-family home, you can earn a reliable source of income through rent payments.
Furthermore, Uganda’s property is quickly appreciating, especially in the urban areas. Hence, you can buy and sell a property after a certain percentage of appreciation.
Here are the considerations to keep in mind when buying residential property in Uganda:
- The location, location, location saying still holds: You want a property that rewards you with good profits.
So, choose a property near shopping centers, schools and hospitals. Also, consider the availability of water, power, and good infrastructure.
- What’s your budget? Determining how much you are willing to invest is one way to prepare your funding. The maintenance cost and rental rates vary from condominiums to multi-unit apartments.
- Consider the property condition: A well-maintained property will quickly attract tenants and save maintenance costs.
- Who should manage your property? Decide whether you want to self-manage the property or hire a property management company, depending on your expertise and availability.
- Consider property laws and regulations: you don’t want to incur hidden expenses. Consider any regulations attached to your property so you can remain compliant.
2. Invest In Commercial Real Estate
This is for you if you want to capitalize on Uganda’s economic growth and development. From office spaces to warehouses, commercial real estate offers a diverse range of advantages.
Here are the significant types of commercial real estate:
- Office spaces: There is a growing demand for office spaces in major Ugandan cities such as Kampala, attracting organizations and businesses looking for suitable locations.
- Retail buildings: You can earn rental income from businesses and retailers from retail properties such as shopping centers and stores.
- Industrial properties and warehouses: Uganda’s logistics and industrial sector is fast growing. You can cater to businesses seeking storage and distribution facilities through warehouses and industrial properties.
Generally, commercial real estate offers relatively higher profits than residential property for the following reasons:
- Higher rental income: You can count on a more consistent and substantial rental income as commercial properties command higher rental rates than residential properties.
- A diverse tenant base: You can have tenants from retailers, organizations and businesses, reducing the risk of vacant spaces month in and month out.
- More extended lease periods: The long durations of commercial leases offer greater stability by reducing tenant turnover rates.
3 Land Acquisition and Development
Land acquisition and development involves purchasing a plot of land and converting it into profitable ventures, including commercial and residential properties.
Development opportunities include building property, investing in agriculture, or combining agriculture and property developments.
Given Uganda’s soaring economic growth. Here are some of the reasons why land acquisition and development is a profitable venture:
- Higher appreciation rates: Infrastructure developments in Uganda are noticeable. Some underdeveloped regions are soon developing, attracting more businesses and investors.
You can expect your property to appreciate, rewarding you with high profits.
Besides, there are available plots for sale with developed infrastructure and neighborhoods, such as the Regency Estate near Nasuti Trading Center.
- Complete control over land use: You determine what works best for you, depending on the market research. You can tailor your land to meet your desired needs and goals.
Here’s a quick guideline for obtaining land for development projects:
- Identify a suitable land location, preferably one with potential for economic growth. Plots near urban areas are some of the strategic locations.
- Conduct due diligence to verify the land’s ownership, including title certificate and legal status, to avoid future disputes or delayed projects.
- Assess the land location, size and the potential returns for intended developments to determine your profit margins.
- Develop a detailed development plan outlining the proposed project, design and development budget.
- Stay ahead of market trends to incorporate on-demand features, technology and designs if building a property.
Here is what you should consider before buying land for development:
- Do your market research: Identify the regions with potential for fast growth. For instance, if there is an ongoing college development, there’s an opportunity for residential property demand.
- Factor in all potential expenses: You don’t want to start a project that remains incomplete for the longest time. To avoid cost overruns, factor in all the project costs, including hidden expenses.
4. Consider Real Estate Investment Trusts (REITS)
With REITs, you can invest in income-generating real estate properties without needing to own or manage any of the properties directly.
Uganda Capital Markets Authority supports two types of Real Estate Investment Trusts including:
- The Development and Construction Real Estate Investment Trust scheme (D-REITs)
D-REITs focus on the construction and development of real estate projects with the aim of selling these properties to generate income for investors.
- Income Real Estate Investment Trust scheme (I-RETs)
On the contrary, I-REITs present a sustained commitment to income-generating real estate ventures. They distribute rental and lease earnings to investors in the long term.
Here’s how Real Estate Investment Trusts work in Uganda:
- Asset pooling: REITs accumulate funds from investors and use the pooled capital to buy, develop, or manage a portfolio of diverse real estate assets.
- Rental income: 90% of the rental income accumulated from the assets is distributed to investors in the form of dividends.
- Liquidity: Unlike direct property ownership, you can buy or sell REIT shares on the secondary market since they share a publicly traded on stock exchanges.
Hence, you can build a stream of regular income in the form of dividends by diversifying your real estate investment across properties and markets.
5. Real Estate Crowdfunding
Real estate crowdfunding is a financial method that involves multiple investors pooling their resources to fund real estate projects.
The projects can range from property development to property acquisition and renovation. Each investor contributes a small amount of money to diversify real estate investments, making them accessible to more people.
Uganda supports various crowdfunding platforms, allowing investors to participate in real estate projects.
Here’s how it works:
- Selecting a platform: Choose a platform that aligns with your needs from the best real estate crowdfunding platforms, such as Fundrise and Realty Mogul.
- Select a project: You can browse and select a real estate project you wish to participate in based on the type and location.
- Contributing to the project: Every platform has a minimum amount to contribute to the chosen project.
- Executing the project: The pooled funds from various investors are used to finance the selected projects.
- Sharing of dividends: You receive a share of the profits once the property is sold or a certain percentage of rental income.
Like REITs, crowdfunding can be a reliable source of regular income, providing an alternative income stream besides owning a property.
However, investors should be keen to conduct their due diligence based on the platform’s reputation, market stability, and tax implications to optimize their profits.
6. Provide Short-Term Rentals And Airbnb Hosting
Uganda has gained traction from tourists looking to explore the diverse culture, beautiful landscape and wildlife. And there’s a wide range of destinations, including Murchison Falls National Park and Bwindi Impenetrable National Park.
These tourists desire a favourable stay for their short-term accommodation, which has led to real estate investors investing in short-term rentals. It involves renting out your spare room, an apartment, or an entire home to tourists for a short stay.
After all, you can use the rental spaces as an investor for multiple purposes, such as conferencing whenever you have no guests.
Here is how short-term rentals and Airbnb work:
- Creating a listing: Property owners create listings on platforms like Airbnb, detailing the property’s features, rental terms and amenities.
- Booking and payment for the property: Travellers browse the listed properties to make reservations and pay for their stay.
- Hosting: The property owners prepare the property for the owners, taking into account any special reservations from the guests.
- Reviews and ratings of their stay: Guests and hosts can leave a review of the stay, contributing to the property’s reputation and presence online.
Short-term rentals and Airbnb are some of the most profitable real estate investment opportunities, recording a steady rise in books and earnings.
Hence, if you have property you can rent on short-term stay arrangements, this is an excellent opportunity.
Here’s what you should keep in mind before investing in short-term rentals:
- Guest hosting calls for proper planning, from communicating with the guests managing reservations and cleaning the premises.
- Many property owners are delving into the short-term rental space, and the competition is high. Exceptional guest experience and effective marketing are vital to maximizing profits.
7. Consider Real Estate Flipping
Real estate flipping involves buying properties intending to improve their value through renovation or strategic development.
Real estate flipping aims to sell the property at higher rates than the initial, making a profit.
Here’s the way to go about property flipping:
- Identify a property: Consider a property that can potentially realize significant profits after improving it. Improvements could be a renovation, strategic transformation, or modernization.
- Negotiate the acquisition: Have a draft budget for your desired improvement to know the maximum amount you will risk in the venture.
- Renovate as planned: It could be interior upgrades, landscaping, or any other improvements you find favourable to increasing the property’s worth.
- Resell the property: Once transformed, make it visible online so you can find suitable investors. The goal should remain to realize optimum profits (factoring in the renovation and marketing efforts).
Real estate flipping can be lucrative with diverse benefits, including quick returns since you are not starting from scratch.
However, it calls you to stay ahead of the real estate market trends so you can identify what consumers are looking for.
Conclusion
There you have it! Seven ways to invest in real estate in Uganda. Which of the ways do you need help with to get started?
At Canaansites Limited, we are committed to ensuring you reap as much as possible from your real estate investment. From property acquisition to management and consultation.
If you have any questions, you can always contact us. Besides, we have a wide range of plots for sale in Uganda, strategically selected for each of your real estate investment needs.
Meanwhile, we hope you found this guide to investing in real estate in Uganda helpful.
Ref: Canaansites Limited
