A CRITICAL REVIEW OF THE CHALLENGES OF REAL ESTATE INVESTMENT FOR BUSINESSES INVESTING IN UGANDA’S REAL ESTATE
The 2021 Statistics Report from the Uganda Bureau of Statistics showed that real estate investments in Uganda in the year 2021 contributed 6.3% to the Gross Domestic Product and 7.8% to the employment opportunities of the country. Despite this significant role, businesses encounter several challenges hindering their efforts to speedily and successfully invest in real estate in Uganda. These challenges that exist include: lack of the provision and availability of expensive serviced land for real estate investment; lack of real estate investment strategy, analysis and management skills; poor real estate investment decisions; inadequate regulatory policy for real estate investment planning and development; expensive real estate finance and lack of real estate financing skills; outdated land and property laws; and existence of a weak professional body monitoring real estate investment professionals. This phenomenon is a cause for a number of real estate developments that are not well conceptualized, business financial losses and bankruptcy due to bad real estate investment decision making and poorly performing real estate investments; evident in the high levels of vacant spaces which according to a 2022 Report by Stanbic Properties averages at 11% for Grade B and 26% for Grade C Buildings. The overall aim of the study was then to conduct a critical review of these challenges from the perspective of the businesses themselves to inform decision making and policy through a multi-dimensional analysis of Uganda's real estate investment environment, utilizing survey methods that included literature review, interviews, and questionnaires with primary data being collected using quantitative research methods while secondary data being obtained from the review of relevant literature and documents. A sample size of 260 real estate businesses out of the estimated 800 was drawn to participate in the quantitative study to meet acceptable and reliable outcomes for the study by allowing only a 5% margin of error in the results of the study and confidence level of 95%. Data analysis was based on the mean score values of the identified challenges as given by the respondents prioritizing challenges that weighted the most significancy and thereafter conducting statistical testing by grouping and assigning values to responses through ranking and order statistics. The study revealed that the highest rated concerns for businesses as key challenges in the existing real estate investment strategy formulation, analysis, decision-making, environment and processes originated from: (i) the unpredictable changes in the property market arising from market volatility, (ii) Uncertainty and the limited access to reliable and update property data prices, rental rates, market trends, (iii) Corruption tendencies in the land administration system, and (iv) the land title acquisition challenges. The research recommends the development of a strategic framework for real estate investment that emphasizes improved access to reliable property data and metrics to facilitate benchmarking across residential, commercial, industrial, and hospitality segments. Further, policy makers will look at the real estate gaps highlighted to craft policy interventions that fully address the needs of businesses and the various stakeholders for sustainable development.
Real Estate, Decision-Making, Investing, Real Estate Challenges, Uganda’s Real Estate.