The lucrative property market and Kampala’s new slums

Uganda’s property market has been raging like a mighty storm for close to two decades now. Property-trading companies have since become household names, so much that residential areas, such as Akright, have been named after them. But it’s not just the big well-known companies that are making money hand-over-fist. Smaller, ones too are flourishing together with individual traders and brokers.

The knock-off effects have been great. Hardware shops are gold mines; they have been for years. Property speculators have smiled to the bank. Architects, masons and porters have thrived. Advertisers and media houses have cashed-in on the frenzy. Steel and cement factories have mushroomed hundreds from just a couple at the turn of the century.

Places like Lubowa, Nalumunye, Gayaza, Munyonyo, Namugongo and Kira, which were mostly deserted bushes 20 years ago, have since experienced rapid development. Today, they are glitzy residential areas, completely incomparable to their former selves. Trendy private homes and high-rise apartment buildings are to be seen at every corner.

The housing deficit
And yet, after decades of incessant construction, there is still a big housing deficit. A recent report by the Uganda Bureau of Statistics notes that every year, there is a housing deficit of 550,000 units. In other words, that is a fancy way of saying that over half a million Ugandans cannot find a place to live every year.

According to the Ministry of Urban Planning, the reasons for the housing deficit are easy to see.
“Uganda’s population growth is running far ahead of the economic growth. Whereas the population increases by two million people per year, our housing increases by only 400,000 units per year.
The high cost of real estate development in Uganda does not help the situation. In one of the studies that we conducted with the World Bank, an acre of land in Kololo at $3m (about Shs11b) is a lot more expensive than an acre in Washington DC that goes for about $1.2m (about Shs4.4b, the capital of the United States,” says David Kasimbazi, an official at the Ministry of Lands Housing and Urban Development.

The financial dynamics
Because of the housing deficit mentioned above, many have procured expensive loans to build rental homes to take advantage of the high demand for housing. But because of the high cost of development, rent has to be hiked to make economic sense.

The high price of rent pushes most people to save vigorously just to be able to build their own homes. This in turn pushes the demand for land through the roof and the cycle starts again.

While the people with financial ability have been building large dream houses on top of the hills around Kampala, the low income earners have been descending on the valleys between those hills. They scrimp by and build one-room mizigos (small units) in wetlands. Some of these make-shift houses are built on plots as small as a regular bedroom.

The market need
“Only 32 per cent of working Ugandans are qualified to access financing. For this reason alone, it is safe to say only that number can build decent housing for themselves. The rest 68 per cent are in survival mode and will make do with any roof over their heads.

Anything to protect them from the weather elements. This could partly explain why these new unplanned residences are coming up around Kampala and other urban centres,” says David Kasimbazi, an official at the Ministry of Housing.

It is these dynamics that pushed the property traders to get creative. Henry Tebusweeke is a property trader and broker in Buloba and Bujjuko on Mityana road.

He says: “Low-income earners like boda boda motor taxi riders, househelps, vegetable sellers, among others, are the largest property market. These people can’t afford a standard plot of 50ft by 100 feet, which is the minimum plot the government can write a land title for. Because surveying and the title deed contribute a considerable percentage to the cost, property traders demarcate large acreages into smaller plots that come with no titles and the resultant costs. This makes them affordable for low-income earners.”

Tebusweeke further explains the business side of this. Property traders buy large chunks of land (an acre and more) for which they get free-hold titles deeds from government. They demarcate the acreage into tiny plots that are much smaller than standard plots. Some can be as small as 20 feet by 30 feet.

Because they are not standard plots, they do not qualify for a title deed and because of that, they are much cheaper than standard plots. At the time of sale, the only assurance the buyer gets is a sales agreement between them and the property trader, written by the LC chairman. And that is as good an assurance as any.

Such is the manner in which places in Kampala like Salama Road in Makindye, Kinawataka in Nakawa, or Kiteezi in Kawempe divisions are teeming with tiny new houses packed together like matchsticks. Forget historic Kampala slums such as Katanga, Kagugube and Kisenyi.

These are brand new slums coming p everywhere in the general Kampala metropolitan area. And like the historic slum, they are built haphazardly. They have no usable roads. They can only be accessed by foot or at best, bicycles or motorcycles. Every tiny space has been developed. Most of them rely on pit latrines for sanitation. There is no running water in most homes, residents have to rely on public water taps.

While the old slums were all in the heart of the city, these new slums are spreading everywhere because of the nature of the property market. Places like Nansana, Kasangati, Mutundwe, Bulenga, Mukono and Kajjansi are fast becoming the Katangas of the future. The most recently birthed one is right below Butabika hospital. Small brick houses are spreading in the swamp like mold on a rotten piece of bread.

What KCCA says
Kampala Capital City Authority (KCCA) spokesperson Peter Kauju explains that the new slums are a reflection of a much bigger social economic challenge.

“There is an ever-increasing population in the city. We need to look at the push factors. So many people come from across the country to live and work in Kampala. This creates a housing deficit that pushes these unplanned developments. Most of these are illegal and they are slated to be demolished. For you to put up any structure [in the city], you need permission from KCCA,” says Kauju.

The land tenure system in Uganda is also partly to blame, according to Stephen Bogere, the senior sociologist at the ministry of Housing.

“The land tenure system has been misinterpreted. While the land is privately owned by Ugandans, it should be used according to the policies like the Physical Planning Act. There is no political will to effect such large scale changes that affect every Ugandan.

The politicians allow these housing developments to continue for personal reasons. Local government bodies like district councils and municipalities do not want to rock the boat. So long as it will negatively affect someone’s votes, it won’t happen,” he adds.

Huge opportunities
The land on which most of these slums are located like Nsambya, Kibuli, Makerere, Mulago, Kamwokya, Luzira are so prime. An acre of land in a place like Kibuli goes for over $1m [about Shs3.6b].

Yet the people living on such an acre couldn’t come up with just 10 percent of that amount if they were asked. This is an opportunity for government and private investors to build low-cost housing in high rise buildings so that most of this prime land can be reclaimed for better economic use,” says Kasimbazi.

The Middle East menial work property market
Peter Byamugisha, a property trader in the Gayaza area, says some of his best clients are the maids working in Dubai.

They contact him on line. Mostly on social media where he advertises in property groups. They buy the plots through third parties who are delegated to sign on the sales agreements on their behalf while they are away.

The number of workers is Dubai is approximated to be at about 140,000 currently.

“Some pay in small monthly installments so that by the time they come back, they start building their tiny little home. Not every one buys to build a home though. Many buy these small plots they can afford, to invest their money instead of sending it to a bank account,” he says.

“Land can double your money in one year. No other business or bank can guarantee you that,” he says, adding: “Since March, I have sold about 64 plots. More than half of them have been bought by people from the Middle East,” he says.

Byamugisha adds that property brokers have been forced to develop a great sense of integrity because of the benefits that comes with it. “Every time you deliver for one and make them happy, you get three more recommendations. If you screw up with one, you lose your cash cow while your friend who kept their integrity tight smiles to the bank.”