The changing face of real estate business
Apr 01, 2009
BY now he could have easily won a medal as the ‘Father of the Property Agency Business in Uganda,’ but, instead, he is a regular prisoner.
By Frank Sserwaniko
BY now he could have easily won a medal as the ‘Father of the Property Agency Business in Uganda,’ but, instead, he is a regular prisoner.
Patrick Kasulu, founder of Property Masters, one of the first formal real estate brokerage firms in the country, represents two striking extremes. On the one hand, his pioneering idea and astute marketing opened many eyes to the solid potential in the real estate agency business. But his abrupt fall; arrest and now bankruptcy represent the dark side of the business.
His followers, the mushrooming real estate agents, seem to be learning from both extremes. They are making steps to professionalise the trade, while still keeping their eyes on the profits.
“It was a learning experience that was bound to happen in a young industry. The lack of regulation and professionalism in the industry is bad not only for the public, but the agents as well,†says Vincent Agaba president of the Association of Real Estate Agents (AREA).
Agaba says the key priorities of the now 30-member association include adopting a code of ethics, training and information sharing to weed out fake agents.
He says risks of dealing with fake agents include buying land with forged titles, paying exorbitant commissions and difficulty of tracing them because they have no permanent addresses.
Unethical agents also hike prices depending on the appearance of the buyer. “If the buyer appears rich, for example when they learn one is a Kyeyo worker, they connive with the seller to increase the price. They also waste time by taking buyers to inspect property without confirmation of offers,†said Samuel Kibuuka, who lives in the UK and once fell victim to these agents.
Other sources revealed that fake agents often connive to rob clients of their money. “If they learn that you are carrying cash, they may take you to an unknown location and rob you,†the source said.
“We already have a draft code of ethics currently under review at the Ministry of Housing and Urban Development. It will address issues like standardisation of pricing, fraud and conflict of interest,†Agaba said in an interview.
Indeed fraud and impropriety are the most rampant vices in the property agency business. Common cases include agents failing to remit clients money, sale of un existing properties and double commissions – where one agent represents both the seller and the buyer.
Architect Duncan Kasozi the acting commissioner for Housing Development and Estates Management at the Ministry of Housing and Urban Development says the ministry is concerned that anybody can engage in real estate business, without any regulation.
As a result, he said, “We have unrealistic charges, exploitation and even theft. The challenge is that at the moment we don’t have a law regulating them.â€
Kasozi, however, said the ministry had established a department, which he currently heads, that is working on drafting the appropriate legislation. He also talks of a public awareness campaign that would commence in the next financial year.
“We are working with organised groups like AREA, with the view of giving provisional licenses to the brokers, pending passing of the law. This will, however, depend on how fast the association builds its capacity, gets well organised and attract sizeable membership,†Kasozi said.
AREA seems to be moving towards this direction. Last month, the association organised a three-day training for its members and other agents, focusing on real estate business management, sales and technology strategies.
Gail Lyona, a US-based real estate expert who delivered the course told Business Vision that although the Ugandan industry was young, there were signs that it would be one of the fastest growing in the near future.
“The impression I have got is that we have bright, intelligent and enthusiastic agents that intend to adopt international best practices. The Association of Real Estates Agents is only a year old, but the direction they have taken and the goals they have set show that in the next five to 10 years, you will have a professional and highly vibrant industry.â€
This should be the aspiration of everyone, considering that prices of land and houses in Kampala remain high, despite the global financial crisis that has battered the industry in the US and Europe.
A survey of price quotations by Eastlands Agency one of the leading sale and rental agents in Kampala indicates that Naguru, Ntinda, Muyenga, Buziga, Bugolobi and Naalya are some of the up market residential areas with a three bedroomed house selling at between sh200m to sh600. To rent it, one has to part with $1000 - $2500 per month. A one acre plot here goes for between sh100m to sh400m.
Former residential areas, particularly Kololo and Kamwokya are now turning into office premises, as the demand for office space in the city continues to rise. A three bedroomed house here goes for between sh800m to sh2b, renting it is $1,500 - $2,500, one acre plot in the same location goes for sh600m – sh1b.
Entebbe Road is becoming a popular residential location, a trend attributed to its proximity to the country’s only international airport and Lake Victoria. In areas around Lubowa Hill, some six miles from the city center, a three bedroomed house goes for between sh200m to sh800m. To rent it you part with $1000 to $2000, while a one acre plot goes for sh60m to sh100m.
With Namanve being turned into the country’s biggest industrial park, property agents say Jinja Road will have double advantage, considering that it is already a preferred buy, being the main link to East Africa’s biggest port, Mombasa.
According to Agaba, areas on Jinja and Entebbe roads rank highest on the buyers’ list compared to areas on Masaka, Mityana, Hoima and Bombo roads.
However, there are a number of challenges, and the potential spillover effects of the financial crisis, is one of them.
Agaba says with Ugandans working abroad constituting a significant part of property buyers, the industry was likely to suffer from reduced cash inflows from Kyeyo workers.
Lyona thinks long term financing is a key challenge to Uganda’s real estate industry. “Financing is a very important part. The cash-based trade in real estate leaves out the large group of people without cash. In the United States, 65% of the population own their homes and most people have got there through mortgage financing.â€
Besides, Uganda has a very small secondary market. “For the market to be effective, property should be changing hands regularly. But now, most people are buying houses and staying in them. A house has not been appreciated as a business,†says Agaba.
He is however, optimistic that this will gradually change.
BY now he could have easily won a medal as the ‘Father of the Property Agency Business in Uganda,’ but, instead, he is a regular prisoner.
Patrick Kasulu, founder of Property Masters, one of the first formal real estate brokerage firms in the country, represents two striking extremes. On the one hand, his pioneering idea and astute marketing opened many eyes to the solid potential in the real estate agency business. But his abrupt fall; arrest and now bankruptcy represent the dark side of the business.
His followers, the mushrooming real estate agents, seem to be learning from both extremes. They are making steps to professionalise the trade, while still keeping their eyes on the profits.
“It was a learning experience that was bound to happen in a young industry. The lack of regulation and professionalism in the industry is bad not only for the public, but the agents as well,†says Vincent Agaba president of the Association of Real Estate Agents (AREA).
Agaba says the key priorities of the now 30-member association include adopting a code of ethics, training and information sharing to weed out fake agents.
He says risks of dealing with fake agents include buying land with forged titles, paying exorbitant commissions and difficulty of tracing them because they have no permanent addresses.
Unethical agents also hike prices depending on the appearance of the buyer. “If the buyer appears rich, for example when they learn one is a Kyeyo worker, they connive with the seller to increase the price. They also waste time by taking buyers to inspect property without confirmation of offers,†said Samuel Kibuuka, who lives in the UK and once fell victim to these agents.
Other sources revealed that fake agents often connive to rob clients of their money. “If they learn that you are carrying cash, they may take you to an unknown location and rob you,†the source said.
“We already have a draft code of ethics currently under review at the Ministry of Housing and Urban Development. It will address issues like standardisation of pricing, fraud and conflict of interest,†Agaba said in an interview.
Indeed fraud and impropriety are the most rampant vices in the property agency business. Common cases include agents failing to remit clients money, sale of un existing properties and double commissions – where one agent represents both the seller and the buyer.
Architect Duncan Kasozi the acting commissioner for Housing Development and Estates Management at the Ministry of Housing and Urban Development says the ministry is concerned that anybody can engage in real estate business, without any regulation.
As a result, he said, “We have unrealistic charges, exploitation and even theft. The challenge is that at the moment we don’t have a law regulating them.â€
Kasozi, however, said the ministry had established a department, which he currently heads, that is working on drafting the appropriate legislation. He also talks of a public awareness campaign that would commence in the next financial year.
“We are working with organised groups like AREA, with the view of giving provisional licenses to the brokers, pending passing of the law. This will, however, depend on how fast the association builds its capacity, gets well organised and attract sizeable membership,†Kasozi said.
AREA seems to be moving towards this direction. Last month, the association organised a three-day training for its members and other agents, focusing on real estate business management, sales and technology strategies.
Gail Lyona, a US-based real estate expert who delivered the course told Business Vision that although the Ugandan industry was young, there were signs that it would be one of the fastest growing in the near future.
“The impression I have got is that we have bright, intelligent and enthusiastic agents that intend to adopt international best practices. The Association of Real Estates Agents is only a year old, but the direction they have taken and the goals they have set show that in the next five to 10 years, you will have a professional and highly vibrant industry.â€
This should be the aspiration of everyone, considering that prices of land and houses in Kampala remain high, despite the global financial crisis that has battered the industry in the US and Europe.
A survey of price quotations by Eastlands Agency one of the leading sale and rental agents in Kampala indicates that Naguru, Ntinda, Muyenga, Buziga, Bugolobi and Naalya are some of the up market residential areas with a three bedroomed house selling at between sh200m to sh600. To rent it, one has to part with $1000 - $2500 per month. A one acre plot here goes for between sh100m to sh400m.
Former residential areas, particularly Kololo and Kamwokya are now turning into office premises, as the demand for office space in the city continues to rise. A three bedroomed house here goes for between sh800m to sh2b, renting it is $1,500 - $2,500, one acre plot in the same location goes for sh600m – sh1b.
Entebbe Road is becoming a popular residential location, a trend attributed to its proximity to the country’s only international airport and Lake Victoria. In areas around Lubowa Hill, some six miles from the city center, a three bedroomed house goes for between sh200m to sh800m. To rent it you part with $1000 to $2000, while a one acre plot goes for sh60m to sh100m.
With Namanve being turned into the country’s biggest industrial park, property agents say Jinja Road will have double advantage, considering that it is already a preferred buy, being the main link to East Africa’s biggest port, Mombasa.
According to Agaba, areas on Jinja and Entebbe roads rank highest on the buyers’ list compared to areas on Masaka, Mityana, Hoima and Bombo roads.
However, there are a number of challenges, and the potential spillover effects of the financial crisis, is one of them.
Agaba says with Ugandans working abroad constituting a significant part of property buyers, the industry was likely to suffer from reduced cash inflows from Kyeyo workers.
Lyona thinks long term financing is a key challenge to Uganda’s real estate industry. “Financing is a very important part. The cash-based trade in real estate leaves out the large group of people without cash. In the United States, 65% of the population own their homes and most people have got there through mortgage financing.â€
Besides, Uganda has a very small secondary market. “For the market to be effective, property should be changing hands regularly. But now, most people are buying houses and staying in them. A house has not been appreciated as a business,†says Agaba.
He is however, optimistic that this will gradually change.