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Real Estate: Technology and Speculation


The rapid growth in Uganda’s population and continued need for infrastructure continues to service the demand for housing. This for example, has manifested itself in form of a 1.6 million housing deficit. This deficit calls for creative ways to increase the supply of affordable housing. A number of developed economies such as Germany, the United Kingdom, South Africa have structured their real estate such that technology plays a key role in the sector’s growth. There has been considerable concern toward the speculative nature of real estate in Uganda, there is therefore need for investors to embrace a more informative approach to property investment anchored on valuation.

  • According to a 2014 survey by the National Association of Realtors, 91% of realtors use social media: to build relationships, networks and generate leads.
  • Real estate transactions often require property valuations because they occur infrequently and every property is unique.

Industry Outlook

The real estate sector in Uganda has experienced a slow but steady growth over the years. Only a few years back, the industry was characterized by sub-standard housing and infrastructure, incompetent practitioners, minimal assets financing, and loose legislative structures among others.

Current Growth Trends and Prospects

Currently, considerable emphasis has gone into zoning and stream lining building codes, a number of competent construction companies are re-shaping the industry, associations are in place to moderate practitioners and foster learning, higher institutions of learning are offering courses in real estate, a handful of financial institutions are offering asset financing and legislative authorities are streamlining the law relating to real estate.

Micro-finance Deposit taking Institutions (MDIs) are gradually registering significant presence in this sector. They have immensely supported the interest of the poor and low income earners. These institutions offer housing loans meant to enable families build or rehabilitate their houses. The loans could have repayment periods of less than a year, and a principal as low as 1 million shillings.

As reported in the Bank of Uganda annual report FY 2015/16, the building, mortgage, construction and real estate sector received 22.79% of the credit to the private sector as of June 2016. This is a 0.23% increase from the credit allocation in June 2015. Credit allocation to personal and household loans amounted to 15.77% of total private sector credit. The graph below shows distribution of private sector credit amongst different sectors.

Population Growth and Housing Demand

The rapid population growth in Uganda and the need for better infrastructure will continuously service an increasing demand for housing and better infrastructure. The population in Uganda was 34.6 million persons in 2014, this was a 10.4 million persons increase from the 2002 census. The average annual population growth rate as of 2014 was 3%. A major concern is the population increasingly becoming young and urbanized, 47.9% of the population is within the age range of 0-14, and 49.2% within 15-64.

There is substantial demand for housing particularly in urban areas of the country. The Uganda National Housing Policy document, highlighted the housing situation in Uganda saying the sector is characterized by inadequate housing in terms of quality and quantity in both rural and urban areas with housing deficit of about 1.6 million units, out of which 210,000 units are needed in urban areas. An estimated 900,000 units are substandard and need replacement or upgrading.

“…the sector is characterized by inadequate housing…with a housing deficit of about 1.6 million units, out of which 210,000 units are needed in urban areas.”

Ability to meet this demand has been constrained by inadequate financial resources for both developers and buyers. The low income levels of most Ugandans has also constrained the demand side of housing. Many individuals have taken to renting over purchasing property. Individuals are also laid back toward the opportunity financial institutions present, in line with home ownership through mortgage packages. This is due to the high lending rates; commercial banking lending rates averaged 24% in FY 2015/16, higher than the 21.6% average of FY 2014/15.

With the growth experienced in the real estate industry and growth in Uganda’s population having a ripple effect on the demand for housing, there is need for the real estate sector as a whole to embrace technology as an effort to reinforce the sector and boost development.

Technology: Maximizing Revenue and Minimizing Cost

Telecom companies have introduced cheaper internet packages and smart phones to the market. This has made mobile applications and technology a driving innovation in the country. Fortunately, real estate practitioners have started paying attention to these innovations which undoubtedly present numerous solutions such as; minimizing costs, establishing corporate and personal brands, establishing lasting links and networks, drafting proposals, research and development among others.

Knight Frank’s: ‘Prophecy’ Software

The adoption of technology is gradual; its use is more evident with global firms like RE/MAX Uganda and Knight Frank. Knight Frank Uganda has registered its presence over a number of social media platforms such as Facebook, LinkedIn, Twitter, Pinterest, and YouTube, these have been avenues for further establishment of its brand and extension of services to clients.

Driving value across commercial and residential property, Knight Frank manages some of the most prestigious office addresses in Kampala, such as the newly-refurbished 15,000 sqm Crested towers office complex, the 6,000 sqm Rwenzori courts and Rwenzori house.

Of particular interest is a web-based business intelligence solution called ‘Prophesy’ used by Knight Frank UK that allows for total transparency and real time reporting, this platform grants real estate professionals up to date, easy to use information that is relevant to their assets or portfolio.

The intuitive graphics and flexible navigation options compliment accessibility to crucial property data relevant for property portfolio management such as; rent collection statistics, tenant critical dates and property service charges. Drawing data from the property management database, the secure mobile package can be integrated with other proprietary software; enabling users monitor all aspects of their property portfolio with access to real time information 24 hours a day, 7 days a week.

‘Lone Wolf Real Estate Technologies’

Lone Wolf Real Estate Technologies Inc. is one of the leaders in real estate software solutions and services, servicing real estate brokerages across North America. A hand full of lone wolf packages have been used by a number of RE/MAX franchises, otherwise its complete enterprise solution enables a firm build and operate data driven and goal oriented brokerages with considerable insight into its agents and the office.

“…its complete enterprise solution enables a firm build and operate data driven and goal oriented brokerages…”

These Lone Wolf packages facilitate the following functions:

  • Lead generation and maximization; placing  property in front of buyers and sellers in numerous ways.
  • Office and finance management; ensuring that all transactions, expenses and data relating to an office are managed in an easy, automated and efficient manner.
  • Recruitment and retention of agents; this platform avails tools relevant to agent performance.

RE/MAX has a franchise operational in Uganda and is quickly registering influence in the sector with services as: valuation, agency, facilities management to mention but a few. Whereas the real estate market in Uganda is characterized by a number of start up firms, they compete in a market with a number of players including global firms, these present a threat to these start up firms unless fundamental resolutions are made.

There are a handful of similar software applications that grant a trial version, this is meant for users to assess whether an application serves their interests before committing to acquisition of the complete package.

Online Platforms

There are a number of online marketing platforms that are available to the average real estate agent, which when used could present an opportunity to reach a vast majority of potential clients.

Social Media Technology is Increasingly Being used to aid Marketing

Online social networks like Facebook, Twitter, Whatsapp, and Instagram are incredibly popular with an increasing number of people spending considerable time using them. This presents opportunity to real estate agents benefiting from wider-ranging, low-cost marketing. These platforms make it possible to interact with clients and potential customers directly, accessing their needs and requirements without having to meet them face to face saving both time and finances.

Subject to property uploaded and shared over social networks, prospects could decide on whether they have interest in the property at the very start. The potential customer pool at an agency’s disposal with social media is unprecedented compared to any other marketing tool.

Price Speculation

Speculation is the act of trading in an asset or conducting a financial transaction that has a significant risk of losing most or all of the initial outlay with the expectation of a substantial gain.

A number of real estate investors make profit through the purchase and later sale of land. This land is acquired as a chunk (unimproved), subdivided and sold as smaller lots. As the lots get sold off there is higher demand for those pending sale, the investors then take to increasing the price of the lots yet to be sold.

Another popular speculative investment property is the infamous fix and flip. Many investors take to acquiring distressed property, repairing the damages to the house and selling for a profit. The fixing is more about making the property decent to accommodate a prospect.

Investors considering any of these investment options are exposed to the risk of losing most of the initial investment but could also be granted opportunity to maximize the return on their investment.

Valuation: Minimizing Risk of Loss on Initial Outlay

Carrying out Property Valuation Enables Minimize Risk of Loss That Can Accrue from Speculation

The key concern with speculation is reduction in the magnitude of risk that sets into play with such investments – the risk of losing most or all the initial outlay on the investment. That’s where the valuation is relevant in real estate investments.

Real estate transactions often require property valuations because they occur infrequently and each property is unique. Appraisal reports form the basis of mortgage loans, estate and divorce settlements, taxation, they are also used to establish property sale prices.

“Market value is one of the most fundamental computations in property investment, being a estimation of it’s worth at a point in time.”

There are several types of value sought by real estate appraisal, a few examples include:

  • Market value; the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after property marketing where the parties had each acted knowledgeably, prudently and without compulsion. Market value is one of the most fundamental values in property investment, being a reflection of the properties’ worth at a point in time.
  • Value in use; this is the value or worth of a property under a specific use (a property’s value subject to its current use). The value in use amount of a property may be above or below the market value of property.  For instance land that is located at a place in the path of growth for a major project and is used as a small farm will have a value in use much lower than the market value.
  • Investment value; a buyer may willingly pay a premium price above the generally accepted market value, if his subjective value of the property (its investment value to him) is above the market value. Differences between the investment value and market value provide motivation for buyers and sellers to enter into the market place.


The real estate sector in Uganda is relatively underdeveloped compared to similar sectors in more developed economies such as the USA, Germany and South Africa. It however exhibits strong growth prospects.

Asigma would like to point out the need for investors to make data-centric property investment decisions as well as harnessing the potential technology extends toward increasing profitability in the sector.

This insight is not paid research but rather internal research based on our advisory and data projects. It is being shared to create public debate and, as such, we welcome any suggestions for improvement. Kindly contact us at