BUY OR BUILD? INFLUENCES IN UGANDA’S HOME OWNERSHIP

Any investor looking to participate in Uganda’s real estate industry has to ask themselves one question. What social, economic, and cultural dynamics influence people’s decisions in the sector? And how does one invest in sync with them?

For a long time, Ugandans have been accustomed to building their own family homes. Slowly over the years, until the house takes a habitable form. At this point, the owner would move in. The remaining part of the structure would take forever to finish. Usually, completion was prompted by an upcoming social event to be held at the home. Plastering the ceilings, painting the exterior, and tiling floors often form part of an introduction ceremony budget. However, the dynamics are changing.

With a growing economy comes new ideas. Previously held notions about how a family should progress become more flexible. It is now common to find a young family moving into a fully finished house, without knowing where any of the building items were purchased. This is because people have now embraced purchasing already-built houses from developers. The emergence of housing developers to supply these houses has also helped to fire this transformation, after all, demand without supply is no market.

A closer look at how this phenomenon has evolved reveals several advancements in Ugandan society. As existing problems are solved, new possibilities emerge and the trend progresses. To understand this development, let’s consider possible influences.

First, we examine why previously it was so hard for people to purchase already-built houses. The first thing that comes to mind is the issue of affordability. Because of low incomes, it was difficult for an individual to save a significant amount to purchase a house. With no mortgage structures in place, the only way for a Ugandan to own a home was to pay full price upfront, in cash.

With limited access to credit and saving hard cash being a near impossibility in Ugandan culture, the wise move was to slowly deposit on building items until you had enough to put up a small section. Start with a foundation, followed by walls, then the roof, and then windows. All these stages would be spaced over years until finally, the person would decide to move in.  

With the economy growing, several individuals earn enough to save for their dream house. This has created a market for homes, in which investors can participate. The increase in the number of Ugandans currently based in the diaspora has also aided the growth of this market, as they can save cash. Some people do not have the time to supervise the construction of the different stages. They would rather buy the finished product.

The other reason many Ugandans previously preferred to build their own house instead of buying, is the need to control design to suit individual tastes. The irony is that although people expressed this need, the houses always looked like the neighbors’. This signified a lack of taste and exposure. Indeed one can't come up with something they have never experienced. With house developers emerging on the scene, we are starting to see outlandish designs taking root in the landscapes of the developing suburbs. The buyers appreciate this variety by purchasing these houses at a fast rate.

Trust issues have also hindered some from embracing the concept of buying an already-finished house. People are skeptical about whether the developer would be honest enough to ensure quality even in the areas that can not be visually inspected before the purchase. Because of stories of unethical conduct by unscrupulous developers, potential buyers may think twice before purchasing, even if the structure meets quality standards.

With improvements in supervision and enforcement of building laws, the trust will continuously grow until people get more comfortable buying finished houses. In the meantime, a developer can develop a good reputation for quality products. This will enable them to stand out from their peers. It will create a constant stream of customers, ready to take up the buildings as fast as they come up.

In conclusion, whereas there is still a long way to go for Uganda to have a bustling real estate market, the train is already in motion. With improvements in the financial sector giving people access to credit facilities, many will want the certainty of buying an already-built home. They will seek to avoid the ever-changing risks related to building a house. These changes will be a key influence in build or buy decisions. Investors who position themselves in Uganda’s homeownership market will take advantage of this trend and reap huge returns on investment.  

To learn more about investing in Uganda’s Real Estate industry, visit https://www.barosgroupltd.com/

About the author;

Benard Sonko is a real estate investment manager and founder of Baros Group Limited. For comments and inquiries, you can reach him on +256742140251 or info@barosgroupltd.com