At a time when the mortgage rates are high and people have lost their jobs, the question at the mind of every real estate dealer is “What’s Next?”.
The value of land might not have had a cut, but how about the value of the property (homes, apartments, etc)? Lots of questions, right?
The landlords are re-thinking about flipping their property now. The real estate foundations that were solid before COVID_19 have been shaken. These varying proportions have affected real estate owners and occupiers. Landlords with long term leases may feel a bit shielded for now as tenants shift their focus on liquidity needs and working remotely with a reduced workforce. It’s real-time business calculations in action.
In 2017, the Ministry of Lands, Housing and Urban Development in Uganda indicated that over 2000 housing units were set up annually. This significant figure highlighted a boom of the real estate industry in Uganda. The housing boom in recent years has led to an increase in housing brokers, property agencies, condos, mortgage facilities, city houses, etc.
However, living and working practices have been evolving as new demographic groups entered the workforce at scale, and retail was undergoing structural change. Real estate has been re-imagined as a service.
Real estate industry in Uganda Vs COVID_19
Has COVID_19 had its impact on the Ugandan Real estate industry?
An emphatic Yes. Appraisers can have their say on this. All sectors will feel the effect in the long term of enhanced sanitizing regimes; the real estate is already one of them.
Covid_19 has forced many Ugandans to adopt technology, and now employees have seen the advantages of remote working. Health and wellbeing have also shot up the agenda. In the same way that security checks have become the norm, so might building entry health checks. All the above has changed the mechanism of real estate business and how it breathes.
As the year started, there was a lot to be afraid of. What started as a virus is now a reference point of every transaction. The lockdown meant that some properties had to be isolated for months so no rent for the landlords. Those with tenants had to be patient, some even went for a rent drop. It has not been business as usual for property owners – Covid_19 has substantially increased the attractiveness of prime properties in the village and safer country locations.
It now tops the list of the problems the industry has had to fight. Looking at our fights, there are still issues unsolved. Issues like:
- Heavy taxes, forget the landlord-tenant new act that regulates the collection of utility bill payments from tenants outside the monthly rent. There is still a need for tax relief and other government incentives.
- The upsurge in the mortgage market that has seen many Ugandans choose to build over buying.
Real estate dealers will be defined by what they do along these three areas to manage this crisis – Response, Recovery & Success.
- • The safety and well being of tenants should be prioritized.
- • Short term liquidity needs should be addressed.
- • Remote working considerations are key. We are talking about location and access to information, internet and financial reporting processes.
Projections on the end-user residential sector
- • The home working environment will mean that properties with space to work and relax will have greater demand. Do we need to talk about technology in the home buying process? Of course yes, the e-transaction process will have to replace physical and cash payments.
- • This recess, however, could be a blessing in disguise for property agents who can provide home offices. There is a significant likelihood of high demand for home offices with high-speed internet. Something you, if you are a property agent, must be thinking about right now. If you are a landlord finding it hard to lure tenants, a renovation in this line would be a great attraction.
- • As demand for low-cost housing over high-end housing continues to grow, we are likely to see a rise in housing units targeting the middle working class (probably a two to/and three-bedroom houses costing between UGX 100m to Shs200m or even less).
- • The lockdowns have also highlighted the value of having access to private outside space, and
two-thirds of respondents expect demand for it to increase.
Since it is hard – expensive – for the semi-urban and urban Ugandans to buy land or build right now, renting seems to be the only way out. However, the cash on hand has been affected by this economic crisis, which should remind you about the rent-effect as people have no money.
Occupancy rates in prime residential suburbs like Kololo, Nakasero, Bugolobi, Naguru, among others are more likely to drop unless there is a rent cut (debateable).
Realtors in business should be aware that Ugandans without private space will be looking for public outdoor green spaces, which may become a higher priority in deciding where to buy.
As home working increases, others might like to move to a more rural setting-think of Buwate, Entebbe road areas, among others. This is partly driven by a desire to have better access to outside space, allied
to the prospect of working from home more regularly. If you a newbie realtor trying to venture into this lucrative business, the advice is to seek professional shoulders to lean on.