Tallest residential property in Kampala underway

VAAL Real Estate, launched a development property that will be the tallest residential tower in Uganda on completion. Named the Cadenza, the property will have 24 floors and three basements. It will be made up of 306 condominiums, including studio, one-bedroom and two-bedroom apartments. The remaining handful are luxury penthouses on the top. The condominium property will be located on Plot 1 Katonga Road, with views of leafy Nakasero, the golf course and Kololo.

Because the intention is to maximise the views, and utilise natural light, the building will feature floor-to-ceiling glass walls. It will have a heated swimming pool, 200 square metres of gym, a running track around the building, sauna and steam bath, children’s play areas, prayer rooms, meeting rooms, games rooms, TV lounges, concierge services and 24 hours security, among the many luxurious amenities.

The property developers opened with attractive offers to those that booked during the launch including discounted prices and fully-fitted kitchens. The building will be finished in 2027.

Game changer

For a while, many industry players have been wary of investing in premium rental homes because they were not considered viable investment opportunities anymore. After 40 years in the Kampala real estate industry, one civil engineer says he decided to sell off his properties in Kololo and invest in tourist lodges.

He said the reason he sold his Kololo properties is because they had not been offering him the expected return on investment. Twenty years ago, when property was comparatively cheaper, he rented out each of them at $5,000 (Shs19m) a month. By the time he sold them five years ago, he was barely getting $1,000 (Shs3.9m) from each. The only way to get a good return on investment was to demolish these old villas and build office blocks but he did not want to go through the trouble with bank loans. The least he is comfortable with was at least $6,000 (Shs23m) from each, but alas.

“A property worth Shs5.8 billion ($1.5m) should at least earn you Shs580m to Shs600m a year, which is 10 percent of the value. But by the time I sold them, each was only earning me a little over Shs300m a year. That return on investment is not worth it,” he said.

He explained that the reason premium homes are no longer investable is because there has been an oversupply of properties and an undersupply of tenants over the last decade, bringing the rates down.

Enter VAAL

But according to VAAL Real Estate, the cause of such unprofitability is because there is very limited rental market for villas in Uganda.

“A stand alone home in Kololo can only be afforded by ambassadors, CEOs, and international NGOs as office space. Those numbers are very limited. The rich Ugandans that can afford to rent a Kololo villa at $6,000 (Shs23m)  already have such a villa down the street. That is probably why that gentleman had to sell,” says Brian Arinaitwe, the head of marketing at VAAL.

The way to solve this problem is not a bigger, shinier villa, but multiple premium luxury villas in one strikingly beautiful building. People who are willing to pay $1000 and above in rent are looking for a certain lifestyle, in that they want to live not just in a fancy house, they want to live as if they stay at a five-star hotel. And this is what VAAL promises.

“Such people would want concierge services, free amenities such as  gym and swimming pool. They do not want to spend extra on security, domestic staff and other bills. They want their money’s worth. They want an Instagramable residence,” Arinaitwe says.

VAAL Real Estate, a Turkish company boasts of more than 20 years in the industry, in advanced global markets.

 “We are a premium luxury property developer. That is our niche. Secondly, we are not just a property developer, we a 360-degree property company.  We do market survey to the construction to management, we do all,” Arinaitwe says.

How VAAL changes the game

Because VAAL is a seasoned premium property manager as well, they sign agreements with each condo buyer to allow them stay on for five years after handing over the property, as property managers.

“We do not just handover the building to the owners, we offer our management services. The reasoning behind this is because we want to maintain the building as pristine as possible in order to keep attracting the right residents. The condition is that if we are not satisfactory after the five years, the owners can find a new manager. But from experience, this has never happened once,” Arinaitwe says.

Making the case for the pricing

A single bedroom apartment from VAAL’s upcoming Cadenza costs $425m. This, according to the company, sounds as a lot of money, but this is the same price that many people spend on homes 20-30 kilometres away from the city.

“A plot in a good neighbourhood such as Sonde, Buwate or Najjera can go for Shs100m and a good four-bedroom house will cost over Shs350m. If you were to rent this house, which is a good measure of return on investment, you would be hard pressed to get more than Shs2m monthly.

“Even if you lived in it yourself, you would end up spending a lot on transport to Kampala, not mentioning the effect of bad roads on your car. However, if one spent the same amount on a single bedroom in Nakasero, one will be able to make $2000 a month, ” Arinaitwe challenges.

Traditionally, in Uganda whenever someone is ready to invest in property, they prefer buying land several kilometres out of Kamplaa to get good deals. But how many houses 15 kilometres out of Kampala, in places such as Bwebajja, Kigo, Najjera can give you Shs2m a month?

Payment terms

● Booking is 15 percent

● Another 15 percent in 30 days

● And 70 percent over three years construction time

Prices

VAAL sells their studio apartment at as high as $89,000 (Shs350m) and their one-bedroom apartments at $108,000 (Shs425m). A two-bedroom apartment is selling at $250,000 (Shs980m). Why are they so expensive?

“Lifestyle. VAAL is all about luxury living. We target young people that are looking for this kind of luxury living. But also, we provide a chance for investors to have marketable properties in the heart of the city.