The Promota Magazine
Real estate grew faster in 2010
BY DAVID SSEMPIJJA
Despite the challenges, the real estate industry continued to attract the attention of more local and foreign investors this year. More industrial innovations were also witnessed in 2010.
For example, Bageine & Company, one of the leading property managers, extended into property development, after decades of providing consultancy services.
“Real estate is one of the fast-growing sectors in Uganda. “This year, we have been involved in construction of houses for sale in addition to our original work of general consultancy in property business,” said Shem Bageine, the company director.
In September, the UK-based Mara Group and Capri Global Capital, merged into Mara Capri Africa, earmarking a sh660b capital investment in the real estate sector in Uganda and other African countries.
Mara Capri’s planned investment, together with the $300m Opec Properties Naguru-Nakawa housing project, could be the year’s biggest highlight as the country seeks to mitigate the housing deficit estimated at 550,000 units.
Mara Group and Capri have a distinguished track record in the property sector development with the former having a $1b portfolio spanning four continents, while the later boasts of a $3.6b in fair market value assets under management as of the end of September 2010.
The impressive progress in real estate also forced banks like Housing Finance Bank to think big in the area of mortgage financing. After 40 years of restricting business to financing non-commercial residential houses, the bank in September decided to tailor products targeting commercial buildings.
The bank through the new commercial mortgage product finances up to 70% of the entire project cost with a minimum loan size of sh500m. The product targets individuals or businesses seeking to purchase, complete or expand housing commercial properties.
“This means there has been a lot of activity in real estate in 2010,” Nicholas Okwir, the bank’s managing director, observed. A cross-section of real estate firms interviewed, had let out or sold between 80 to 90% of this year’s stocks.
The year also leaves multinational real estate players like Kensington Luxury Heights not regretting venturing into Uganda. “We begun construction in March 2008 for a total of 149 houses ranging from two to five bedroom units.
“Between December 2009 and January 2010, we handed over our phase one for occupation. Year 2010 has been a success because it’s the period during which the number of sold off units at Kensington has hit 90% in our phase one and 50% in our phase two,” Lynnete Chiromo, the general manager, noted.
Noah Ssonko, a private property broker, explained that more transactions were witnessed in land than houses in June. “But in the last quarter of the year, the influx of buyers from the diaspora has shifted the trend. It’s now more houses sold than land,” he disclosed.
“Finished houses now sell more than shell units because the diaspora clients are more interested in houses ready for occupancy.
“More land will be sold beginning March next year,” Ssonko pointed out. Stakeholders are, however, still concerned that lack of government intervention in the industry remained a challenge through the year.
“It has been noted that in countries that have government involvement in housing are doing so much better towards achieving their housing goals. The Government needs to take a more active role especially for low cost housing to bridge the deficit gap,” argued Chiromo.
“We expect the industry to continue growing, but enforcement on structured and planned developments should be encouraged. We still believe Uganda is a great and conducive place to invest and has great potential for growth,” she added.
The Government intervention would come in form of developing roads, water and electricity extension and enforcing standards of building materials.
“Infrastructural development costs incurred by property developers increase the selling price by 40%. This hinders the provision of low cost housing,” Anatoli Kamugisha, the president of the Uganda Private Property Developers Association, said.