The role of the diaspora in Uganda’s real estate market

The Ugandan diaspora has long played a vital role in the country’s economy, but its influence on the real estate market has become especially pronounced in recent years. With investments and remittances, the diaspora not only affects the property development landscape but also has a broader impact on Uganda's retail, leisure, and construction sectors.

Their growing contributions are accelerating Uganda's real estate market, creating new opportunities for both local and international stakeholders. However, while the demand for housing continues to grow, estimated at thousands of units annually, the true challenge lies not in the quantity of housing but in what Moses Lutalo, managing director of Broll Uganda, describes as “effective demand.”

This concept refers to the ability to afford and actually purchase these properties, and it is here that the diaspora's influence is most evident.

Affordable housing takes the lead

For many professionals living abroad, especially those in the diaspora with substantial financial means, real estate investment is both a personal goal and a strategic financial move.

Lutalo estimates that the diaspora is responsible for between 30 to 40 percent of the demand in Uganda’s real estate market, with a significant portion of that demand directed toward affordable housing.

While high-end properties may appeal to some, especially those residing in countries such as the United States or Canada, the majority of diaspora investors are more focused on securing real estate that can provide for their families or serve as a long-term investment.

“Many members of the diaspora already own homes abroad, so their focus is not necessarily on luxury properties,” Lutalo explains.

“Instead, they are more inclined to invest in affordable homes that offer security for their families and serve as a financial asset for the future.”

Preference for land

One trend that stands out among the diaspora is a strong preference for land over ready-made homes.

This is particularly true for Ugandans living in regions such as the Middle East, where many are employed in informal jobs with varying income levels. For these individuals, purchasing land to build a home over time often makes more financial sense than buying a finished property. Miriam Tusubira, the proprietor of Infotrust Property Consultants, says many diaspora buyers prefer the flexibility of land ownership, as it allows them to build gradually and pay for the construction in instalments according to their income.

“Many of our clients prefer building modest homes, with budgets around Shs50m,” says Tusubira.

“Instead of buying a finished home, they often choose to buy land and build over time, paying as they go. This approach gives them the ability to secure a home without the burden of large, upfront payments.”

This long-term, step-by-step approach to home ownership not only fits the financial capabilities of many diaspora members but also gives them a sense of accomplishment as they see their homes take shape over time.

The appeal of apartments

While the trend of buying land is notable, there is also a rising preference for apartments.

According to Lutalo, this preference stems from the fact that apartments provide better security, lower maintenance costs, and more manageable investments. Many members of the diaspora, find owning an apartment to be a more practical option than a standalone home. Apartments offer not only security features such as guards and gated communities but also shared services such as gardening and maintenance, reducing the burden on owners who live abroad.

“Many of our diaspora clients are investing in apartments because they offer a low-maintenance, secure investment,” Lutalo explains.

“For instance, in our affordable housing developments in Nsambya, apartments are priced between Shs380m to Shs450m and around 80 percent of the owners are based overseas. They rent out their apartments, often through platforms such as Airbnb, to generate income.”

The growing interest in apartments is also due to their practicality. Unlike standalone houses that require significant upkeep, apartments tend to be more cost-effective to maintain and more suited to the needs of absentee owners who wish to keep their investment hands-off while still generating rental income.

Location shifts

There has been a noticeable shift in where the diaspora is choosing to invest in property. Traditionally, high-end areas such as Kololo, Nakasero and Naguru attracted the most affluent buyers. However, as the demand for affordable housing increases, many diaspora investors are now turning their attention to more affordable peri-urban areas.

Locations such as Entebbe, Mukono, and further out in suburbs such as Kira and Gayaza have become increasingly popular.

These areas offer more affordable land and housing options, making them attractive choices for diaspora investors seeking value for money and long-term stability. In fact, peri-urban areas are emerging as the new hotspots for those seeking an ideal balance between affordability, security and accessibility. With developments and infrastructure improving, these regions present a promising opportunity for those looking to invest in Uganda's growing property market.

What the diaspora looks for When it comes to property titles, the diaspora tends to have a clear preference for freehold and private mailo tittles, as opposed to leasehold titles, especially those issued by the Uganda Land Commission (ULC).According to Lutalo, the perception of security around ULC titles is one of the main reasons diaspora investors favour freehold and private mailo titles.

ULC titles, which typically come with a 49-year lease, offer a right of first refusal when the lease expires, allowing the property owner the first opportunity to renew the lease or sell the property. However, there remains some hesitation toward Buganda Land Board (BLB) titles, as there is a lack of understanding about how these titles work.

The perception of insecurity surrounding these titles can sometimes dissuade potential buyers from making investments in properties under BLB jurisdiction.

“There is a stronger sense of security with freehold and private mailo titles,” Lutalo explains. “Diaspora investors are generally more comfortable with titles that offer clear ownership and fewer complications.”

Challenges in real estate transactions

One of the significant challenges that diaspora buyers face when investing in Uganda’s real estate market is the issue of trust. Fraudulent activities, such as false land sales and misrepresentation ,are unfortunately common, leading many diaspora investors to approach the market with caution. Phoebe Kukiliza, a Ugandan living abroad, says she was scammed while trying to purchase land.

“I spent two years sending money back home, trusting a family member to help me buy land,” Kukiliza recalls.

“When I finally returned to Uganda, I found out the land did not exist. It was a scam, and I had no recourse to get my money back.” Kukiliza’s experience highlights a broader issue within Uganda’s real estate market; the lack of transparency and accountability. Many diaspora members are reluctant to invest in property because they fear falling victim to scams or dealing with unreliable contractors and agents.

“To address this issue, it is essential to improve transparency in the market,” says Tusubira.

“Buyers need to be able to trust the agents they work with and it is important for property developers to establish a reputation for integrity.”

The key to securing investments One of the most critical pieces of advice Tusubira offers to potential buyers is to conduct thorough due diligence before committing to any real estate transaction. She explains that a simple property search by a lawyer can reveal important information, such as any unresolved disputes, the property's history, and whether it has any legal encumbrances.

“I once purchased land that I later discovered had unresolved disputes,” she says. “By the time I realised the issue, I had already sold 50 plots to other buyers. Resolving the problem was time-consuming and costly, and it could have been avoided with a simple property search.”

For diaspora buyers, working with trusted agents and legal experts who can ensure the legitimacy of property transactions is crucial. Building a network of reliable professionals in Uganda can help mitigate risks and provide peace of mind.

Growth and economic impact

The diaspora’s role in Uganda’s real estate market extends far beyond personal investments.

By injecting capital into the property sector, the diaspora is helping to fuel economic growth and create jobs in construction, infrastructure, and other sectors. Additionally, the remittances sent home from the diaspora have a profound impact on Uganda’s overall economy. According to the Daily Monitor, Uganda recorded up to Shs5.5 trillion in remittances as of January 2024 from January 2023, a significant portion of which has been channelled into real estate and related sectors. These funds not only support property development but also stimulate growth in other areas of the economy, including retail and leisure, particularly during festive periods when businesses experience a surge in activity.

IMPACT

According to the Monitor, Uganda recorded up to Shs5.5t in remittances as of January 2024 from January 2023, a significant portion of which has been channeled into real estate and related sectors. These funds not only support property development but also stimulate growth in other areas of the economy, including retail and leisure, particularly during festive periods when businesses experience a surge in activity.