It is that time again when people make plans to achieve some noble goals in the New Year.
They fiercely vow to themselves, and even promise relatives and friends, to invest time and money in their dreams.
But how many people consider owning a house as a primary residence — the very minimum in real estate investing — as a goal worth steadfastly pursuing in 2020?
Does owning a house even feature in most people’s list of the top 10 resolutions?
National statistics point to a crisis in housing provision — a compelling reason why more people should invest in real estate.
Kenya’s aggregate housing deficit is more than two million units (a conservative estimate). The situation is not any different in Uganda.
According to a presentation by Jonas Unoba of Uganda’s Ministry of Lands, Housing and Urban Development at the Association of Real Estate Agents conference recently, there is a looming housing crisis in Uganda. There is a housing deficit of 2.5million units, projected to be 8million units by 2040.
Uganda’s Land and housing ministry’s target is to provide 200,000 housing units per annum by 2022.
Unoba says Uganda’s annual need for new housing is 200,000 units; yet construction rate of reasonably good houses is estimated at 60,000 units; creating a deficit of 140,000 units annually.
In the housing shortage lies a massive opportunity for people to invest, even in only one house. This is probably the best time to plan for such an investment.
The rollover from 2019 to 2020 gives all people that once-in-a-year opportunity to reflect, dream, plan and commit to become better and, generally, improve their lives. People hope to get better jobs, make more money, become healthier, take their children to better schools, travel the world and make exciting friends. They generally hope to enjoy a higher quality of life than they did last year. That is why they make those ‘hard-to-keep’ resolutions.
Putting money in real estate as an investment can bring great rewards.
For some people, buying a property and watching its value appreciate over a long time is a fine way to prepare for a financially secure retirement.
Properties such as houses, apartments, commercial complexes and other types of real estate are investment options for people to expand their portfolios.
Real estate investment needs serious commitment though. Taking the step to save a portion of the amount needed can be the beginning of this exciting journey.
For that to happen, we have to raise their savings game. Statistics show that the savings-to-Gross Domestic Product (GDP) ratio has stagnated or declined in the past decade.
Low national savings are believed to be one of the issues that needed fixing. Without increased savings, it would be difficult to seal the yawning housing gap.
And the ongoing urban migration appears to be worsening the housing crisis.
In the cities and big towns such as Kampala, Nairobi, Mombasa and Kisumu, most of the residents, about 60 per cent, live in slums yet more people are migrating to urban centres.
Unoba says: “Growing need for housing is due to a rapid population growth Rate (3.4 per cent) and a high urbanisation rate (5.4 per cent)”
Irrespective of where they live, everybody has to have a roof over their heads. This is a basic right.
However, the delivery of low to medium-cost housing has been slow. The key is to provide affordable housing, with affordable finance.
What people need to keep in mind is that property, unlike other investments, can be leveraged. This means it can be used to secure a lot of borrowing.
In most cases, the existence of the property is security enough for a lender.
The first step, though, is to make some savings towards the goal of owning a house. Probably, this is the year to make that move. Do not procrastinate. Act now.
Before you invest in real estate
•Learn the market you want to invest in.
•Do not speculate: A first investment property to be one that generates cash flow.
•Find an Expert: Take your time and really understand the market.
•Carefully Screen Tenants:
•Your property will only be as successful as the rent-paying tenants who sign the lease.