Kampala property market shows strong growth in 2023

More multi-storey homes were built in a bid to meet the demand for integrated spaces.  PHOTOs/tony mushoborozi.

What you need to know:

Office developments which were due to come onto the market in 2023 have been delayed, with completion dates for most of them pushed to 2024/2025

Uganda’s economy did better in the second half of 2023 than it did during the same period in 2022 and as such, the property market followed suit. According to the Uganda Bureau of Statistics, the economy grew by 5.2 percent in 2022/23 as compared to 4.6 percent in 2021/22. The services sector was the biggest Gross Domestic Product (GDO) contributor at 42.4 percent, followed by the manufacturing sector at 26 percent and the agricultural sector at 23 percent.

In the first half of 2023, inflation continued to decline due to several factors, key of which were lower international commodity prices, bumper crop harvest due to sufficient rains, a stable exchange rate and tight fiscal and monetary policies.

The economic growth was supported by continued recovery in the tourism sector, export diversification, agro industrialisation as well as investments in the oil and gas sector. Because of this positive trajectory, there was growth in household real incomes thus increasing consumer spending on property among other areas.

According to a market performance report by premier property company, Knight Frank, economic activity strengthened in the second half of 2023, resulting in a general increase in uptake of commercial, residential and industrial spaces.

Residential sector

In the period between June and December last year, the prime residential market (Kololo, Nakasero, Naguru) grew by six percent year-on-year. The average monthly rents for two-bedroom apartment units grew by four percent while rent for three-bedroom apartment units increased by one percent on a year-on-year comparison. The report reveals that the growth is attributed to prime apartment units that have recently been completed in these areas, offering larger living spaces and better amenities thus commanding higher rates.

The high uptake of apartments in these areas, the report reveals, is attributed to expatriate staff that are unable to find stand-alone houses within their rental budget on one hand and many of them preferring community living on the other. Landlords had hoped to benefit from demand driven by the oil and gas sector but were disappointed because actual demand fell short of projected levels.

“The preferred prime residential accommodation type, especially among the senior expatriate staff remains stand-alone houses or houses in a gated community. However, there is limited choice in this segment, given the short supply of detached houses in prime suburbs,” the report reads in part.

The biggest reason for dwindling stand-alone houses for residence in prime residential areas is because places such as Nakasero and Kololo, have become more commercial areas and redeveloped with modern apartment blocks to take advantage of economies of scale from increased rental incomes and reduced operational costs from multi-let units. Secondary residential areas of Mbuya, Munyonyo, Muyenga, and Bugolobi, are gaining popularity in this segment as a result.


Prime suburbs such as Muyenga, Buziga and Munyonyo registered increased construction activity. The report reveals that developers are expanding the catchment area for prime residential demand outside of the traditional areas in and around the Central Business District (CDB). Land in these areas tends to be comparatively cheaper and developers are able to maximise creativity and innovation in their offerings with regards to design, unit sizes, layout configurations and functionality.

This, experts say, is a welcome trend which is raising the bar and standards of residential stock for sale and rent.

Greater Kampala and other secondary suburbs such as Kulambiro, Kikaya, Mulago and Ntinda exhibited sustained demand for homes in the middle-income price ranges, with most buyers drawn to properties priced below Shs350m. As a result, more multi-storey homes were built in a bid to lower prices and capitalize on the demand, not forgetting integrating residential and commercial elements within prime residential areas.

In the pipeline

According to the report, the prime residential pipeline activity remains relatively high with approximately 600 new units expected on the market in the areas of Nakasero, Kololo, and Naguru in the next two years representing a 14 percent increase in pipeline activity as compared to H2 2022.


Demand for condominium apartment units for sale within a price range of $150,000 to $200,000 in the 10-12km-radius from the city centre was high in H2 2023. Such locations as Lubowa, Mbuya, Kyambogo, Makindye, Mutungo, Muyenga, Ntinda, Munyonyo, Buzinga and Luzira are highly sought after.

Office space

Demand for Grade A prime office space increased by 10 percent year-on-year, to Shs63,000 ($16.5) per square metre and by 12 percent year-on-year to Shs57,000 ($ 15) per square metre for and Grade AB. Grade A includes Nakasero, Kololo and Naguru while AB includes Mbuya, Munyonyo, Muyenga, and Bugolobi.

The report also reveals that there has been a general improvement in prime office occupancy with vacancy rates reducing by one percent when compared to H2 2022.

Tenants seeking units under 200sqm of office space accounted for 47 percent of inquiries while demand for larger spaces diminished significantly, with only 29 percent seeking spaces in the 200-1,000sqm and 24 percent seeking above 1,000sqm.

This disparity is partly due to reduced demand from Foreign Direct Investments and the oil and the gas sector who have driven demand for large office spaces over the past few years.

Shifting demand

Office space demand is shifting, according to the report. While core sectors such as consultancy services, civil societies, finance, health sciences and Information Technology, remain strong, newer entrants in the renewable energy sector and lottery companies are emerging. Interestingly, 75 percent of inquiries prioritise renting over buying, suggesting a preference for flexibility in this dynamic market.

The average selling and letting period in Grade A offices in prime locations such as Nakasero, Kololo and Naguru oscillated between three to six months while those in less prime areas have recorded long letting periods of more than six months.

In the pipeline

Pipeline office developments which were due to come onto the market in 2023 have been delayed with completion dates for most of them pushed to 2024/2025. These delays were attributed to development finance constraints, unexpected/delayed regulatory hurdles, and unusually prolonged and torrential rains over the last six months among others.

Commercial sector

The commercial sector registered growth in H2 2023 as measured by turnover, occupancy and footfall performance. Turnovers from the sector increased by 14 percent in H2 2023. The healthy performance was on account of promotions during the period under review which included Black Friday promotions and the Festive Season sales in select stores.

The second half of 2023 saw the introduction of the following new retailers into the portfolio. Strat Bridal and Oak Café opened at TMT Atrium in Bukoto, Krunchix opened at Metroplex Shopping Centre in Naalya, Eden Gym unveiled at Village Mall in Bugolobi, The Patio, Myavanna, and Black Drip opened at Arena Mall in Nsambya. Uhome, a white and brown goods retailer, introduced their first 1,000m ² store at the Arena Mall. Uhome is set to fill and take over the gap that was left by Game when it exited the market in H1 2023.

Testing expenses

On the downside, emergence of new international and regional retailers slowed down due to Uganda National Bureau of Standards (UNBS) stringent testing requirements for the certification of products entering Uganda. UNBS no longer accepts international accreditation of products by other bodies such as the International Organisation Standardization (ISO).

The new testing model requires that each product imported into the country be assessed again, requiring a product from each container to be sent to laboratories (some of which are international) for testing, with the importer incurring the testing costs.

Manufacturing space

Rental rates have maintained relative stability in H2 2023 as compared to H2 2022 with rates ranging between $3 to $ 7 (Shs11,420 and Shs26,643) per square metre for warehouse space.

Demand for industrial space remained hinged on continued business growth and improved economic environment with the highest demand recorded for space sizes ranging from 300- 1000 sqm. Demand for spaces of more than 1000sqm declined.

Companies in the automotive, manufacturing, interior design, pest control, pharmaceutical, and beverage industries, to name a few, are driving up this demand. More industrial players are preferring to buy their own premises rather keep renting on account of need for operational control, long term growth plans and availability of capital.

There has been a marked preference for areas of Bweyogerere, Namanve and Kawempe where land prices are more affordable as compared to the traditional industrial areas of 1st to 8th Street Industrial Area, Nakawa and Ntinda.

The increased interest in these areas is attributed to the continued infrastructure improvements within these new industrial hubs, easing access to major trade routes connecting them to the rest of the country and the export/import market in the east African community. These improvements also make these areas accessible to Kampala’s CBD.

The letting period in this sector ranges between three to nine months depending on various factors.

In the pipeline

Pipeline developments for both rent and sale have continued to come up in various industrial areas. On Mulwana Road, a mixed-use industrial property is coming up with about 16,340sqm. Enterprise Park in Nakawa-Mbuya has more than 2000sqm coming onto the market in 2024 as well as multiple units coming up in Namanve, Nalukolongo and Luzira industrial area. In total, over 40,000sqm of warehouse is expected on the market in 2024 for both rent and sale.

Demand for industrial space is mainly driven by agro-processing, renewable energy, construction, cold storage, and technology sectors. Specialised services/ sectors such as pharmaceuticals, data centres and cold storage require automated temperature-controlled systems and Warehouse Management Systems (WMS) among others.