Kampala more attractive for real estate investors than Nairobi – Report

Kampala, the capital of Uganda is a more attractive market for real estate investors than Nairobi, Kenya due to the lower rates for land and rent and higher effective demand.

Cytonn Investments’ report titled: “Kampala Real Estate Investment Opportunity: A pearl of Opportunity” revealed that average rental yield rates of 6.8 percent, 10.6 percent and 10.2 percent in residential, office and retail space in Kampala compared to Nairobi with yields at 5.6 percent, 9.3percent and 10.0 percent.

However, Kigali, Rwanda  recorded the highest yields 9.2 percent, 12.9 percent and 13.1 percent for residential, office and retail themes, respectively with Kampala recording higher rental yields than Nairobi.

“The Kigali Market is however nascent and small as the City has a population of 1.1mn against Kampala’s 1.5mn people and Nairobi’s 3.6mn in 2016 according to the country’s respective statistical bureaus,” reads part of the report released on Monday in Kampala.

The report pointed out that in Kampala,  “Huge housing deficit and low supply of Grade A office space create demand for the residential and commercial office themes in Kampala leading to attractive returns of 6.8 percent and 10.6 percent, respectively and increased real estate development.”

Speaking during the release of the report, Cytonn’s Managing Partner & Chief Executive Officer, Edwin H. Dande, noted that,“Cytonn has over Kshs 82 bn of projects under mandate, across 10 real estate projects, all of which are in Kenya. It is not time to provide diversification to our investors. We have registered Cytonn Uganda, we have completed market research, we are now looking for opportunities in this market.”

Edwin added that, “Cytonn is going to partner will local experts and networks to do adapt what we have done in Kenya to the compelling Kampala market – delivering the best returns to our investors, housing the middle class, creating jobs and training entrepreneurs. We shall be targeting to deploy at least USD 100 million of investment in this market.”

Today we take the first step to #CytonnUganda, step by step relentlessly.

— Edwin H. Dande (@ehdande) September 25, 2017

Cytonn Investments Senior Manager, Regional Markets, Mr. Johnson Denge said,”We started with Kigali – Rwanda in 2016, and between June and July 2017, we carried out a real estate market research in Kampala – Uganda.”

“Real estate in Kampala has attractive returns with average rental yields of 6.8 percent, 10.2percent, and 10.6 percent in residential, retail and commercial office, respectively, against average rental yields of 5.6 percent, 10.0 percent and 9.3 percent for similar themes in Nairobi.

Development of real estate continues to provide attractive returns, while delivering housing to combat the housing deficit of 1.6 million units in Uganda, which grows by 100,000 units per annum in Kampala alone. The key drivers for the attractive returns in the Kampala market for the best performing zones have mainly been high demand in the areas, ease of access from the CBD, and low supply in the market to cater for the high demand.”

Read: ‘Mortgages are unaffordable’ in Nairobi Metropolitan area housing markets