9% - 10.8% Land appreciation rate in uganda 2023 (challenges & causes of different price levels).

high rate appreciating land

The land price appreciation rate refers to the percentage increase in the value of a pieces of land over a specific period. It is a crucial growth indicator for investors and real estate professionals. The Land value increases with informed decisions helps assess the potential return on investment and make the right investment strategy decisions. Understanding the land appreciation rate is essential for successful property investment strategies.

Land appreciation in Uganda is a crucial metric to know whether your project will appreciate over a specific period of time. The discussions on the x spaces below helped to estimate a 9-10.8% land appreciation over 9 years in areas like kyanja and sonde. However there were comparisons between investing in a plot of land or a unit trust or a treasury bond

A unit trust is an investment vehicle that pools money from multiple investors to invest in a diversified portfolio of assets, such as stocks, bonds, or real estate. The trust is managed by a professional fund manager who makes investment decisions on behalf of the investors.

A treasury bond is a type of government debt security that is particularly beneficial for individuals who may not have the time, expertise, or desire to actively manage their investments. Treasury bonds are considered to be low-risk investments because they are backed by the full faith and credit of the government.

Treasury bonds offer a fixed interest rate and have a specified maturity date, at which point the bondholder receives the face value of the bond. Treasury bonds are typically issued by the government to finance its operations and fund various projects. They are considered to be a safe haven investment, as they are highly liquid and can be easily bought and sold in the secondary market.

A case study showing how Uganda land appreciation is at a range of 9% -10.8% annually in the capital market

Land vs Unit Trust vs Treasury Bond: The Best Long-Term Investment in Uganda?

Twitter discussions on first round and second round on the long-term capital appreciation of land or Real estate return.

In Uganda, many of us have invested heavily in real estate because we believe it is the best low-risk, low-activity investment. But what does the data say?

In this series of articles, we will focus on a particular class of Ugandans with ready cash to buy everything and particular locations. Prime locations like Kyanja, Kungu, Entebbe and Kira are some of the best places to buy land for capital appreciation.

Case 1:

In July 2015, a plot of land in Kyanja was selling for 380 million shillings. This is the quoted public price, but My research indicates that such a plot sold for between UGX 300 million and UGX 350 million. For this discussion, let's assume the price was UGX 300 million.

Quoted price of 60 decimal plot in Kyanja.

From an online survey and in some groups I’m in, I asked how much would this plot of land go for right now, 9 years later, and answers ranged from 500 Million to 700 Million. What a land value increase rate.

My closest estimate of the current sale price might be around 600 million shillings at the lowest and 750 million shillings on highest. This means that a plot of land that cost 300 million shillings in 2015 (as above in picture) is now worth at least 600 million shillings, doubling in value or a good land value appreciation rate. At best, it is worth 750 million shillings, a significant increase.

What if you had invested this money in other products? What would have been the return?

Unit Trust: If you had invested 300 million shillings in a unit trust with the lowest return over the same 9 years, you would now have 780 million shillings with an average return of 10.5% per annum. With an average return of 11.5% per annum, you would have 870 million shillings.

Treasury Bond:

If you had invested 300 million shillings in a treasury bond in 2015 (the comparable bond at the time, UG0000001517, had a coupon of 17% for a 10-year treasury bond issued in 2015), you would now have around 1.7 billion shillings in total bond value with compounded coupon investment.

Now the goal is yours: Where do you want to invest next if you have cash at hand and your goal is to invest for the long term (over 10 years)? Buy land, invest in a unit trust, or invest in bonds?

Land vs Unit Trust vs Treasury Bond: The Best Long-Term Investment in Uganda? Pt-2 28.10.2023

28.10.2023 discussion centered around Kyanja, a prime location which has seen it’s value grow exponentially, but even then we saw some interesting figures. Today this post is going to Look at Sonde and Namugongo for these select three plots of land I got. What does the data say?

Case 1:

In November 2014, a plot of land in Sonde was selling for 16 million shillings. And one of my follower bought it at 16 million. a 50*100 plot of land. This is what we have verified and was paid.

From the same inquiries, that same plot of land now is going between 60 Million - 70 million Uganda Shilling.

What if you had invested this money in other products? What would have been the return?

Unit Trust: If you had invested 16 million shillings in a unit trust with the lowest return over the same 9 years, you would now have 48 million shillings with an average return of 10.5% per annum. With an average return of 11.5% per annum, you would have 54 million shillings.

Treasury Bond

If you had invested 16 million shillings in a treasury bond in 2014 (the comparable bond at the time, UG0000001517, had a coupon of 17% for a 10-year treasury bond issued in 2015), you would now have around 97 Million shillings in total bond value with compounded coupon investment.

Based on the data, we can see that the investment in this plot of land made more money than the Unit Trust, but Treasury Bonds still have a slight lead. However, the difference between Bonds and Real Estate is only around 25-30 million Ugandan shillings, which is significant.

This highlights that land is not the only investment that can make money in Uganda right now. It is important to diversify your investments to reduce risk and maximize returns.

Going forward, I would recommend investing in a portfolio of assets that includes both land , Unit Trusts and Treasury Bonds. This will allow you to benefit from the potential for capital appreciation and income generation from all asset.

However today a number of many people and organizations..have gone ahead looking at

  1. Risks surfaced with land today.
  2. Risks surroundings tbills and tbonds.
  3. Risks surroundings Unittrusts.
  4. Risks surroundings high gain entrepreneur business ideas in relation to the political climate
  5. Risks surrounding Fixed deposits and Building Assets[Apartments, concubines, Hotels,Super markets ,Bars,Malls,Acades] e.t.c

With these decisions in regards to Diversification in various entities of investments,better grounds for future income generation in regard to Cash Flow have been established.

Ultimately, the best investment decision for you will depend on your individual circumstances and risk tolerance. It is important to do your own research and consult with a financial advisor before making any investment decisions.

I hope you have a great new week and potentially invest in Uganda’s Capital Markets.

Kizito Rashid is a Risk Advisor, finance and investment analyst with over 5years of experience in Finance. He is passionate about helping Ugandans invest and grow their wealth, and is an insurer and a speaker on topics related to insurance, finance and investments.

Challenges of land appreciation rate and what would hinder the potential metric of growth rate.

Challenges that can hinder the appreciation of land are diverse and multifaceted. They encompass a range of factors that require thorough considerations like:

Among these challenges are limited infrastructure development, which can impede the growth and accessibility of land. This can hinder its appreciation potential as it restricts the ability to maximize its value through improved connectivity and amenities.

Another obstacle to land appreciation is the presence of restrictive zoning regulations. These regulations can limit the types of developments allowed on a particular piece of land, thereby constraining its potential for growth and value appreciation. This can be particularly problematic in areas where zoning restrictions are overly stringent or outdated, preventing the adaptation and evolution of land use to meet changing needs and market demands.

Political instability is yet another challenge that can hinder land appreciation. Uncertainty in governance and policy-making can create a volatile environment for investment and development, deterring potential buyers and investors from engaging in the market. This can lead to a lack of confidence in the long-term prospects of land appreciation and result in stagnant or declining property values.

Environmental concerns also play a significant role in impeding land appreciation. Increasing awareness of sustainability and environmental impact has led to stricter regulations and requirements for land development.

Causes of different land price levels in different localities as a return on investment for land value in a specific period.

Promoting sustainable practices like clever cropping and crop rotation in land development can have both positive and negative impacts on the costs and complexities associated with it. While sustainable practices are beneficial for the environment and long-term sustainability, they can also increase the overall expenses and challenges involved in the development process. This can make the land less appealing for investors and developers, ultimately affecting its potential value.

The location and proximity to amenities and services can greatly influence land prices. Areas with high demand for housing, commercial spaces, or recreational facilities tend to have higher land prices. Access to transportation networks, educational institutions, healthcare facilities, and entertainment options can also contribute to the desirability and value of land in a specific area.

Economic factors such as market conditions, employment opportunities, and income levels also play a significant role in determining land prices. Strong economic growth and a stable job market can drive up the demand for land, leading to increased prices. Conversely, economic downturns or limited employment opportunities can result in lower demand and subsequently lower land prices.

Furthermore, demographic factors can impact land prices. Population growth, migration patterns, and changes in household composition can all influence the demand for land in different areas. Areas experiencing population growth or attracting a specific demographic group may see increased demand and higher land prices.

Lastly, government policies and regulations can have a significant impact on land prices. Tax incentives, subsidies, and development initiatives can attract investment and drive up land prices.

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Hi,am Karueddie working with Edremedystocked homes Ltd as a property manager, real estate broker and a distributer of palm oil agent. i am also a golf addict and love the game as my main hobby.

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