Value of properties dwindles in Kampala, Wakiso

HOUSING

The value for residential property in the Greater Kampala Metropolitan Area (GKMA) has dwindled, a report has indicated. 

The GKMA covers Wakiso, Kampala and Mukono districts and their urban areas. According to the Residential Property Price Index (RPPI) for the second quarter of the financial year 2020/21 by the Uganda Bureau of Statistics (UBOS), property value registered a minus 3.3%. 

STATISTICS 

According to statistics, the quarterly decline was due to drastic reductions in all the divisions across Kampala. The RPPI indicates that the value of properties in Nakawa, Kawempe and Rubaga divisions declined by minus 12.5% and 12.4%, respectively during the second quarter 2020/2021, compared to a 13% and 8.2% rise recorded in the first quarter. 

For properties located in Kampala central and Makindye divisions, the RPPI reported a decrease by minus 8.1% during the second quarter from the minus 2.5% drop registered in the first quarter. In the study, UBOS used a hedonic pricing approach to compute the RPPI. 

HEDONIC PRICING

 According to UBOS, hedonic pricing is a method that identifies price factors, and these are represented as price-determining characteristics that exist and affect both internal and external features of the property. 

CAUSES

 Rachael Katungira, a professional real estate business manager, attributed the decrease in property value to the COVID-19 pandemic. She said the pandemic affected the spending culture and that did not spare the real estate industry. 

"Due to uncertainty around the pandemic, those who had planned to buy or move to new places could not. Spending reduced the whole year," she explained. Katungira said real estate development in rural areas and urban centres which are relatively affordable, also had an impact. 

She added that upcoming estates in areas such as Gayaza have increasingly impacted on the value of property in Kampala and other urban areas. Just like the fuss around new clothes, she said people love new places and will abandon urban areas for estates in rural locations. 

Katungira said congestion in Kampala and other urban areas had also led people to abandon prime properties in urban areas. "People love space. If they are looking for a house to rent or buy, they want a big compound and space to park vehicles, among others. 

Places such as Makindye and Nakawa are congested, that is why people are no longer interested in acquiring them," she explained. However, Issa Sekito, the Kampala City Traders Association spokesperson, attributed the decrease to the political season. "Currently, people are reluctant to buy property over the uncertainty of the elections.

"Several people working with government but own property, are failing to sell them. Whenever a potential buyer or tenant learns about the rightful owner, some suspend the deal," Sekito said. "We are hopeful that once the political season is over, the sector will stabilise and people will buy these properties," he added.

WHAT IT MEANS FOR TENANTS 

Rachael Katungira, a professional real estate business manager, says property owners are losing out and that tenants or buyers will benefit from cheaper deals. 

However, she says real estate investment will also dwindle if the situation persists. For those developing apartments, Katungira advises owners to have spaces for supermarkets and pharmacies on the ground floor. 

Alternatively, developers should also think of creating spaces for offices. 

Issa Sekito, the Kampala City Traders Association spokesperson, advises property owners to be considerate to tenants by reducing charges.