WINNING IN UGANDA’S REAL ESTATE INVESTMENT GAME

I spent over a decade in the construction industry, specifically doing contracting work. Over this period of time, I interfaced with various clients investing in a wide range of real estate projects. In this time, I noticed that some investments yielded good returns on capital whereas others had disappointing returns. Those who were winning in Uganda's real estate investment game made the right decisions and they would often return to us to take on the next construction project. On the other hand, those who invested in the wrong properties would decry the Real estate industry, sometimes swearing never to put a dime in construction ever again. The widely varying results from different investments got me curious to find out what it is that separates the winners from the losers. I discovered a number of factors that may influence the results of a real estate investment. For the purpose of this post, I will dwell on just three of them.  

The first and most critical aspects an investor should focus on is customer needs. Many a time, proprietors come up with ideas of properties based on what they, themselves feel like is a good concept, neglecting the needs of their potential clients. Whether it is residential accommodation, commercial structures or shopping malls, owners may want to impose what they think would be nice, instead of putting themselves in the customer’s shoes and thinking about what that final consumer would want.  I one time had a client insist on closing up a commercial structure with boundary walls and gates, neglecting the fact that it had been constructed to host shops. The tenants obviously cared more about visibility to the road traffic than security of the premises. It was no surprise that months after the building had been finished, majority of the rooms remained unoccupied because they did not make business sense to potential renters. Not very far from this location, another investor put up a line of shops off a boundary wall directly facing the road, and all ten of them were booked out halfway through the construction phase. This second investor understood what his potential clients wanted.

The second factor I would like to highlight is the lack of investment appraisal for most real estate projects. Failure to find out what the targeted market can afford causes a lot of frustration later for many investors. If you are targeting an area where majority of the people can only afford a limited amount in monthly rent, it is not so wise to put up an expensive structure hoping that you will be able to charge highly and recoup your money fast. I have seen investors come with expensive taste for their residential apartments, spend a huge amount on fancy finishes, only to be disappointed by the offers that potential renters bring. I would recommend that before one decides to put up a certain kind of property in any given area, first do market research to determine what your future earnings will look like. This information should guide the amount of money that you should spend on construction for you to be able to achieve your investment results. You can engage a number of professionals to guide you through this process to enable you make the best decisions.

Another cause of frustration for most real estate investors is overlooking the importance of working with the right people. Unlike other forms of investment, real estate has many moving parts. From appraisal, planning and design, construction, to property management, all these areas require different skillsets that one particular individual may not have. Because you have to rely on all these people’s contributions for your investment to be successful, you need to be careful to make sure that you work with the best people at each stage of the process. A mistake done at the design stage could completely ruin your project. In other cases, structures worth billions of shillings have collapsed because of construction quality related issues. Sometimes it is the cost of making corrections during the construction that frustrates the investment numbers. It is therefore critical to work with a real estate investment advisor who has gathered enough experience to guide you through this process.

In Uganda, real estate investment is one area where everyone seems to just wake up one day and decides to put up something without much consideration. Those who are successful get there through making a number of costly mistakes before they learn the valuable lessons. However, this does not have to be the case for you. Engage the services of a professional to guide you through the process. 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