What you need to know:
- Consumers are now willing to trade off residents in shorter travel distances with ones in far away locations if they are extensive and have better amenities
A report by Knight Frank has indicated that proximity to Kampala or the central business district as a major determinant of residential location, is no longer as critical as it used to be.
This, the Kampala Next Neighborhoods report indicates, is due to a shift in consumer preferences, many of whom are now willing to find residence in locations faraway from Kampala - where many of them work - in return for better properties that are built in well-structured communities and have access to various amenities.
“There is now a shift in consumer preferences, with many willing to trade shorter commutes for more extensive, modern properties with various amenities,” the report, which highlights different developments in the real estate sector within the 2023 first quarter, reads in part.
It explores new or secondary neighborhood suburbs, among them Kyanja, Najeera, Naalya, Lubowa and Entebbe. It further notes that in the past decade, the real estate industry has grown significantly, stretching beyond the original seven hills of Kampala to include the broader areas of Wakiso, Mpigi, and Mukono.
The growth, the report notes is being propelled by demographic, economic, and infrastructural factors as well as a rapidly expanding central business district, an increasing working population, and improved transportation networks.
All the reviewed secondary suburbs, apart from Entebbe, which is about 36 kilometres out of Kampala, are located within an average of 11.8 kilometres out of the central business district.
The report also highlights a number of factors that are unique to the new or secondary suburbs with demographic composition and price of land being the most outstanding.
For instance, the report indicates that at least 77 percent of the households within such areas are below 30 years, while an acre of land in Kyanja costs an average of Shs1b and Shs900m in Najeera.
In Naalya and Lubowa it costs an average of 1.25b and Shs1.17b, respectively, while in Entebbe, an acre goes for an average of Shs1.46b.
Among the reviewed suburbs, Najeera has the lowest rates in terms of rent with a one-bedroom unit going for an average of Shs600,000 per month. Two and three bedroom units, the report indicates, go for Shs850,000 and Shs1.2m, respectively.
Najeera is followed by Kyanja with rental properties going for Shs650,000, Shs1m and Shs1.3m for one, two and three bedroom units, respectively while Entebbe and Lubowa have the highest cost of rent with a one-bedroom rental going for an average of Shs1.8m and Shs1.46m, respectively.
The report also notes that whereas in the three suburbs of Kyanja, Nejeera and Naalya, transactions are largely conducted in shillings, in Entebbe and Lubowa, they are done in mixed denomination, where both shillings and dollars are accepted transaction currencies.
Outlook of new suburbs
The report also notes that the new suburbs have an emerging Airbnb industry, increased supply of housing units, affordable housing projects, shared living and tenants are usually mid-income, young marrieds and full nesters.