Rising High For Kampala's Buildings

Rising High For Kampala's Buildings

A boom in high-rise apartment building will test Kampala’s market demand for the expensive, high-rise rental units in the works. The constructed buildings will cater for residential, commercial and office space demands.

The increase in the high-rise apartment buildings is as a result of population growth, rapidly increasing middle class and growing national economy. According to 2015/2016 budget, Uganda’s economic growth is projected at 5.8%.

Kampala city now resembles one huge construction site as residential as well as business and office buildings spring up along the streets. Construction works are also booming in the suburbs.

According to the latest Construction Sector Indices released by Uganda Bureau of statistics, “Annual changes show that the price index for the whole construction sector, covering material prices, wage rates and equipment hire rates, increased by 4.8% in the year ending October 2015, compared to the year ended October 2014.
The report attributes the overall annual rise in input prices as whole sector level to an increase in prices of inputs of, residential buildings and civil works.

In an earlier Kampala Property Market Outlook report by Knight Frank, “The trend of consumers moving to suburban retail nodes has continued and the suburban malls are starting to cement themselves as leisure shopping outings, and changing the landscape of consumer movement and behavior in and around Kampala”.

The close of 2015 and early 2016 brought in a noticeable slowdown in the residential letting market with limited demand for accommodation from the expatriate community and corporate companies as most in the Oil and Gas sector continued to steadily downsize whilst other affiliated service providers and downstream support companies closed down operations completely. 

The residential sales also experienced less activity as a result of increased mortgage interest rates that have risen to 21% - 23% per annum. 

The 2016 elections period has also   caused anxiety and uncertainty within the mid to upper niche of the residential property market hence holding off decision making to invest until after the elections.

Despite these challenges however, the construction boom in Kampala, and the growing population and increasing middle and long term prospective returns will continue to attract investments.

Improved roads and increased commercial farming activity in Kampala’s strategic neighboring areas of Mpigi, Mukono and Wakiso are spreading substantial growth in new housing projects.

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