What lies ahead for the real estate sector
The sell and buying residentials is with no doubt one of the most thriving section of the industry. This could be so because of the ever increasing demand of for residential houses in Uganda.
The good performance of this section [Residentials], Mukembo says, will most likely result in an increase in demand for credit, including mortgages.
“Consequently, there should be a marked increase in volume and value of residential mortgages this year, although unfortunately commercial mortgages will continue to decline as banks remain cautious of speculative activity in the segment,” he says.
He also adds that the year 2019 will see property developers have an improved sales velocity as more upbeat, confident consumers look for good deals.
“The affordable housing segment will see the best performance, especially in demand for “starter” homes. The formal housing market will continue to be concentrated in the Greater Kampala Area, especially in the Kampala, Mukono, and Wakiso Districts, and their immediate neighboring boroughs. Given the cost of land and other factors of production, and considering good urban planning principles, we should also see an increase in densification in these areas – being the construction of multi-family rather than single family housing units,” he explains.
As the year goes on, Mukembo also says that incremental construction will become even more mainstream as more mortgage lenders embrace the segment with offers for construction, extension and other products aimed at encouraging and supporting low and lower middle-income earners to transition to owning formal housing.
How the sector will fare in the long term
“Sophistication of primary players and intermediaries like banks, property developers, valuation surveyors, commercial tenants and other users, real estate agents, lawyers, and so on, might come on board in 2019 as the market formalises in search of a larger scale and more complex opportunities,” Arthur Mukembo predicts.
He explains that this will lead to demand for specialised training and designations aimed at creating opportunities for distinction for practitioners.
“You will begin to see licensing of real estate agents – “brokers”, artisans, casual labourers and so on. This will result in more sophisticated real estate investments, business models and transaction types such as rent-to-own, buy-to-let, real estate investment trusts, exchange traded funds, sell-and-leaseback, and build-own-operate, among others, as investors seek higher return on investment amidst increasing sophisticated competition,” he predicts.