ESSENTIAL SKILLS AND KNOWLEDGE FOR UGANDA’S REAL ESTATE MARKET

Before investing your hard-earned money into a real estate deal, you must develop several competencies to avoid catastrophic losses. This is especially true in Uganda’s market, where systems are not yet developed enough to support seamless investment. The ability to pick out the winners from the vast pool of investment opportunities remains the most critical differentiator between real estate investors. This article explores the essential skills and knowledge for Uganda’s real estate market.

1.      MARKET UNDERSTANDING

Market understanding involves appreciating the different dynamics influencing people’s perception of your product. Before investing in particular real estate projects, one should consider cultural biases, land tenure systems, and population demographics. Uganda’s real estate market is comprised of indigenous and foreign consumers. It is also divided among poor, middle-class, and wealthy customers. All these demographics have differing needs when it comes to housing, and an investor must define who their target customer is, so that they can provide precisely what is demanded.

A common mistake investors make is to develop a project without targeting a specific market cluster, thereby ending up with a product nobody wants. An example is where one builds high-density multi-story condominiums in a serene suburb far from town. On paper, this looks like a good investment, but the people who like living in such high-density apartments also enjoy being in the middle of town. Therefore, they will not be drawn to such a project. To be successful, investors need the ability to do thorough research to understand the market.

2.      FINANCE

Real estate is a capital-intensive industry. Therefore, one needs special skills to navigate the high capital demands. From understanding local mortgage options, alternative financing available, and interest rate calculations, an investor needs to know how best to go about their capital requirements. Interest rates in Uganda have been high, which makes mortgage financing expensive. Investors have often resorted to creative financing methods such as partnerships, discounted off-plan purchases, and staggered payment plans to finance their real estate investments.

It is also essential for an investor to understand metrics such as return on investment, cap rates, and cash flow forecasts to determine the viability of various investments. Another aspect of finance that investors need to consider is the tax regime because it affects the performance of their investments.

3.      TECHNICAL SKILLS

The intricacies of investing in Uganda’s real estate industry require one to have the hard skills of property evaluation. Particular aspects of property acquisition, such as land title verification, building quality analysis, and zoning regulations, are important to the results one achieves out of their investment. Imagine buying land for development only to find out later that the authorities can not allow you to put up the kind of building you had in mind. That would be devastating to your investment goals. To be successful, one needs to acquire skills that will enable them to execute their plans

4.      NETWORKING AND RELATIONSHIP BUILDING

Real estate is a game of relationships. Knowing the right agents, lawyers, and other professionals opens investment opportunities. Unlike in the Western world, where opportunities are listed for the public to view and select, Uganda has no organised listing platform where you can shop for real estate deals. Opportunities are shared through word of mouth; therefore, you need an established network of industry players to access the best opportunities. Knowing the right people in government offices makes getting approvals for your projects easier. The most successful investors maintain a trustworthy professional network that keeps the deals flowing.

5.      RISK MANAGEMENT

The nature of real estate projects presents numerous risks that investors have to be ready for. From financial and construction risks to market risks, investing in real estate exposes you to potential losses at various stages. An example of a financial risk is running out of funds midway through a project. If such happens, you may fail to get extra finances to complete the project, leaving you stuck with an incomplete building.

Other risks involve failure to find a market for your finished product. Given the fixed nature of real estate developments, you cannot transfer them to a different location. Mitigating such a risk could involve building with a design that can easily be converted into another type of property, such as converting residential units into offices.

Although investing in Uganda’s Real estate industry presents many challenges that require various skills and knowledge to navigate successfully, it presents opportunities for great rewards for the investor willing to learn what it takes to win in the industry. 

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