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“A Pearl of Opportunity” report says Kampala has attractive returns in real estate investments

It is based on research conducted in Kampala between June and July 2017 by Cytonn’s Research and Deal Origination Team.

Real estate investments ae not only good investments when the need of accommodation and housing come calling. They also pay well for investors who see them as a long term deal solution for growing business.

A development affiliate of Cytonn Investments, Cytonn Real Estate has released a new report stating that real estate investments in Uganda’s capital are attractive.

The report themed “A Pearl of Opportunity” focused on the performance and the investment opportunity in the real estate sector in Kampala in 2017.

It is based on research conducted in Kampala between June and July 2017 by Cytonn’s Research and Deal Origination Team.

The report says real estate in Kampala has attractive returns with average rental yields of 6.8 per cent, 10.2 per cent, and 10.6 per cent in residential, retail and commercial office, respectively, against average rental yields of 5.6 per cent, 10.0 per cent and 9.3 per cent for similar themes in Nairobi.

Development of real estate continues to provide attractive returns, while delivering housing to combat the housing deficit of 1.6 million units in Uganda, which grows by 100,000 units per annum in Kampala alone.

Speaking during the release at Protea Hotel early in the week Cytonn Investments head of private equity Shiv Arora noted that “performance of the retail sector was construed by the high supply in the market as a result of a retail boom over the last five years that saw malls coming up next to each other in the city.

“We thus expect to witness reduced development in the retail sector with investment development activity being concentrated in the middle income residential sector and in Grade A offices in areas with low supply such as Kololo,” he said.

He added: “The key drivers for the attractive returns in the Kampala market for the best performing zones have mainly been high demand in the areas, ease of access from the CBD, and low supply in the market to cater for the high demand.”

Occupancy levels
According to the report, on average high end residential zones of Kololo, Naguru and Bugolobi had rental yields of 6.1 per cent and occupancy levels of 83.9 per cent.
Upper middle income areas of Naguru, Mbuya, Ntinda, Muyenga and Lubowa had on average rental yields of 7.4 per cent and 84.9 per cent occupancy.

Middle income areas of Naalya, Kiwatule, Namugongo and Kira, among others, recorded average rental yields of 5.9 per cent and 88.8 per cent occupancy.

Commercial offices had average rental yields of 10.6 per cent at 86.0 per cent occupancy while retail recorded average rental yields of 10.2 per cent and 71.2 per cent occupancy.

Cytonn managing partner and chief executive officer Edwin H. Dande, revealed that Cytonn has over Kshs 82b (Shs2.8 trillion) of projects under mandate, across 10 real estate projects, all of which are in Kenya.

“We have registered Cytonn Uganda, we have completed market research, we are now looking for opportunities in this market,” he said.

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