Beyond the policy challenges, the interview explores a sector in the midst of a structural evolution, driven by shifting tenant behaviours and the rise of decentralised, convenience-led suburban retail. Addressing the rising tide of foreclosures and “speculative development,” the discussion highlights the urgent need for professional valuation standards and consistent urban enforcement to protect long-term asset value. Despite these pressures, the CEO maintains an outlook of “cautious optimism,” identifying resilient growth opportunities in oil and gas, student housing, and affordable residential segments for the year ahead.
As the year draws to a close, from your perspective as a CEO, how would you characterise 2025 so far — the good, the bad, and the ugly — across the wider business environment? Looking across different sectors, what has surprised you, what has been most challenging, and how is this year shaping expectations for the year ahead? Where should people feel optimistic, and what key risks or uncertainties should they be mindful of as we look forward?
One of the most notable positives of 2025, particularly in the latter part of the year, has been how relatively uneventful it has been, and in Uganda’s context, which is actually a good thing. Historically, election cycles have been highly disruptive to business, so at the beginning of the year, we realistically planned for what we assumed would be a shortened, nine-month operating period.
Based on previous election cycles, we expected significant interruptions, closures, strikes, and politically driven unrest. Instead, that disruption largely did not materialise. I genuinely cannot recall a single instance where we were forced to close our offices because of riots or political disturbances. There were isolated incidents in parts of the central business district, but these were trader-related rather than political in nature.
That relative calm allowed businesses to continue operating, and from a planning perspective, that predictability mattered. That said, activity has slowed, which is entirely consistent with a pre-election environment. Capital becomes cautious, major decisions are delayed, and transactions take longer to close. We are seeing consistent inquiries, but execution timelines have lengthened significantly.
Another defining feature of the year has been the behaviour of banks. Lending appetite, particularly to the real estate sector, has reduced markedly. Banks are making rational opportunity-cost decisions, weighing the perceived risk of private-sector lending against the ease of lending to government, and capital has shifted accordingly.
The most challenging aspect of the year has been the disconnect between positive macroeconomic indicators and the reality within the real estate sector. Despite headline growth figures, the sector is under pressure, largely because of the current tax regime. Rental income tax, VAT exposure on amenities such as swimming pools and furnished apartments, and recent tax tribunal interpretations have all contributed to negative sentiment.
The RE sector is being aggressively targeted for revenue collection, but the unintended consequence is that new investment is being discouraged. That is not healthy in the long term. Where optimism remains is in the fundamentals; demand has not disappeared, it has shifted. The key risk going forward is whether policy recalibration happens in time to support sustainable growth rather than suppress it.
If you had the opportunity to sit down with the Minister of Finance, the Commissioner General of URA, and the President, what would you tell them about the current tax approach to the real estate sector? Do you feel the pace and expectations placed on the industry are too aggressive, and if so, where do you think the balance should be recalibrated?
Quite simply, the sector cannot go any deeper; it is already there. The conversation now needs to shift decisively from going deeper to going wider.
The current tax approach has become intrusive and overbearing, particularly for investors who are already compliant. Rather than broadening the tax base, the system is extracting more from the same pool of taxpayers. The unintended consequence is that capital is being driven out of the sector.
We are seeing this very clearly. Developers are selling assets, shelving projects, and reassessing whether real estate still makes sense as an investment. When you analyse the numbers objectively, the challenge becomes obvious. Investors can lose close to 40% of gross income through a combination of taxes. From what remains, they still need to service financing costs that can be around 20%, in addition to operational and maintenance expenses.
At that point, opportunity cost becomes decisive. Investors start asking whether it makes sense to keep capital tied up in a high-risk, illiquid asset like real estate, or whether it is more rational to redeploy that capital into government bonds, unit trusts, or other asset classes, or even outside the country altogether.
That is the decision many investors are now being forced to make, and it is not a healthy signal for the sector or the wider economy.
Not every investor has the option of moving capital to markets like Dubai, so for many, the more immediate comparison is within the region. How does Uganda’s real estate and tax environment compare with Kenya’s, particularly in terms of investor treatment, allowable costs, and overall competitiveness?
Broadly speaking, the tax frameworks in Uganda and Kenya are similar. Where the difference lies is in how pragmatic each system is in recognising the actual cost structure of real estate investment.
Kenya has shown greater flexibility, particularly around financing costs. There has been thoughtful consideration, and in some cases implementation, of allowing interest expenses, or portions of them, to be treated as allowable deductions. That single policy choice materially improves project viability.
In Uganda, financing costs are not allowable at all, yet interest rates are often around 20%. Given that debt servicing is frequently the single largest expense in a real estate project, excluding it from allowable costs places enormous pressure on returns.
That exclusion alone can tip the balance against continued investment, compress margins, and make real estate increasingly difficult to justify relative to alternative opportunities within the region.
As these additional costs and tax pressures build up for developers, many try to pass them on to tenants. How is that playing out in the market, and what are you seeing in terms of tenant demand and behaviour?
What we are seeing is a clear and sustained shift in tenant behaviour. Businesses are moving out of the city centre and relocating to suburban and peri-urban locations.
For many tenants, there is no longer sufficient value in being downtown. What was once perceived as cheaper and more convenient has become congested, difficult to access, and operationally inefficient. Parking is limited, traffic is heavy, and logistics have become a daily burden.
Historically, being in town made sense because traders operated as wholesalers. Trucks could come in, offload, and leave. That model has changed. Modern businesses prioritise space, storage, parking, and ease of movement. Areas such as Kyebando, Nalukolongo, and emerging commuter nodes now offer those advantages.
As developers attempt to raise rents to offset rising taxes and costs, tenants are responding by relocating. Population movement, infrastructure expansion, and changing business models have made decentralisation both viable and permanent.
We saw during COVID how many tenants slowed down, moved online, and began looking outside the city centre, and that trend seems to have accelerated since then. We’re now seeing a surge of new malls and retail centres in suburban and commuter towns — some very well planned, others less so. From where you sit, how is this shift affecting the older, established malls in the city? Are they being disrupted, or is the market segmenting in a different way?
What we are seeing is market segmentation rather than disruption.
Large, established malls have remained resilient because they offer scale, tenant diversity, and experience. Cinemas, entertainment, destination dining, and anchor retail continue to draw footfall from wide catchment areas.
Suburban and commuter-town centres are deliberately smaller and convenience-led. Typically ranging between 1,500 and 2,000 square metres of Gross Lettable Area (GLA), they are designed to serve immediate neighbourhood needs rather than compete with destination malls.
This is a natural evolution of a growing city. As populations decentralise, retail follows. Larger malls retain their relevance, while smaller centres meet local demand. Retailers and brands clearly understand this distinction and are adjusting their expansion strategies accordingly.
There’s someone out there today with capital — say a million dollars — who’s thinking, “I want to invest in property.” For an investor in that position, how do firms like Knight Frank add value? How do you help someone turn capital into a well-planned, sustainable investment rather than an expensive mistake?
The value we add is straightforward: we help investors avoid costly mistakes. Many investors rely on anecdotal advice from relatives or friends who have built before. Others begin with architects, who play a vital role in design and construction but are not responsible for market viability.
Architects are paid per square metre built. We focus on square metres that can be rented, absorbed, and sustained over time. That distinction is critical. We test demand, assess feasibility, advise on optimal use, and align developments with market realities. The consultancy fees involved are negligible compared to the financial losses that arise from vacancies, misaligned designs, or underperforming assets.
I recently saw a newspaper headline suggesting that there are many empty office and commercial towers in the city. To what extent is that a consequence of developments being undertaken without proper research, planning, or professional advice?
Partly, yes, but the issue runs much deeper than poor research alone. What we are seeing is the result of a long-standing culture of speculative development. For years, many projects have been driven by ambition, ego, or the desire to create a landmark, rather than by market demand.
There has been a persistent assumption that if you build, tenants will automatically come. In reality, very few developments are delivered with a clearly identified end user or after meaningful demand testing. Pre-letting and tenant profiling remain the exception rather than the norm.
In a properly de-risked development, tenants should be secured or clearly identified well before completion. Here, the opposite often happens. Buildings are completed first, and only then does the search for occupants begin. That sequencing almost guarantees elevated vacancy.
A key factor enabling this behaviour is that many developments are equity-funded rather than debt-funded. Without lender scrutiny, projects proceed unchecked, risks are deferred, and the consequences only become visible once the building is complete, through prolonged vacancy and underperformance.
Real estate is often viewed as an alternative income stream, but with banks pulling back on lending, how are loan portfolios in the sector actually performing? From where you sit, are you seeing an increase in foreclosures, and what does that say about the underlying health of real estate assets?
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Yes, we are seeing a noticeable increase in foreclosures, and while this is often attributed solely to macroeconomic pressure, the reality is broader and remains very much nuanced.
High financing costs, heavy taxation, and tight liquidity continue to place significant strain on property owners. Interest rates in Uganda remain high, and when those costs are layered on top of rental income tax, withholding tax, VAT exposure, and rising operating expenses, many borrowers struggle to sustain debt service. This pressure is further compounded by a persistent liquidity squeeze. Uganda remains a consumption-driven economy with relatively low domestic savings, and a high import bill means capital continues to flow out of the system rather than circulate within it.
However, from a valuation and credit-risk perspective, another critical and ongoing factor is contributing to these foreclosures. The quality, competence, and integrity of valuations underpinning lending decisions.
A number of the foreclosures we are seeing today originate from weak valuation practices at the point of loan origination. In some cases, properties are overvalued due to inadequate market analysis, poor understanding of income sustainability, or failure to accurately assess demand, absorption rates, and downside risk. In other cases, there are ethical lapses, where valuations are prepared to facilitate transactions or satisfy lending requirements rather than to reflect defensible market value and risk.
This is precisely why the use of properly qualified, professional, and experienced valuers is critical. Valuation is not a box-ticking exercise. It requires deep market knowledge, technical competence, professional judgment, and strict adherence to ethical standards. When valuations are prepared by inexperienced practitioners or where professional standards are compromised, loan-to-value ratios become distorted from the outset. Facilities are then extended on the basis of values that cannot withstand stress, volatility, or market correction.
When interest rates rise, liquidity tightens, or occupancy softens, as is happening now, those weaknesses are exposed very quickly, leaving both borrowers and lenders vulnerable.
From my perspective as an experienced valuer, valuations are fundamental risk-management tools. The quality of the valuer matters just as much as the quality of the asset. Strong, independent, and professionally executed valuations protect lenders, investors, and the stability of the sector as a whole. Weak or unethical valuations increase risk.
Importantly, this does not mean that the underlying real estate assets are inherently poor. In many cases, the assets themselves remain sound. The problem lies in the combination of aggressive lending assumptions, inadequate valuation rigour, and an operating environment that continues to be highly unforgiving.
So, while financing costs and liquidity constraints are clearly driving stress in the sector, the continued rise in foreclosures is also a warning signal. It underscores the urgent need to strengthen valuation standards, insist on the use of competent and experienced professionals, and uphold ethical practice across the industry. Without addressing these issues, the cycle of distress will continue, regardless of broader economic conditions.
I remember attending an event at URA where you were present alongside Dr. Sudhir Ruparelia, and one point that really stood out was the advice that it’s not wise to borrow for your first property. Do you agree with that approach? And based on your experience, what practical advice would you give to people — especially first-time investors — who are looking to enter the real estate sector?
Yes, I agree with that principle, particularly when it comes to first-time property ownership.
There is a critical distinction between building a personal home and investing in income-generating property. A personal residence is primarily about security and long-term stability. In that context, borrowing is often unnecessary and can create avoidable pressure. Building gradually, within your means, is usually the healthier approach.
Income-producing real estate is quite different. It is capital-intensive, illiquid, and carries meaningful risk, especially in a high-interest-rate environment such as ours. For that reason, it should not be treated as a standalone investment.
The practical advice I would give is to build wealth and income stability first, diversify across asset classes, and only then introduce real estate as part of a balanced portfolio.
There’s a popular joke among young people that says, “Let your plot of land take you to work.” From your perspective, how should young people navigate these sometimes-conflicting ideas about renting versus owning property? What practical advice would you give them?
It is important to remember that land itself is also property, and ownership does not have to mean immediately building a house or taking on debt.
Rent is still a cost, even though it feels incremental. Ownership, whether of land or built property, creates long-term value, collateral, and a foundation for generational wealth. However, ownership also requires affordability, patience, and discipline.
For many young people, buying land and banking it is a very practical middle ground. It allows them to enter the property market without the pressure of construction loans. The advantages are clear. Land typically appreciates over time, it secures location early, it provides a tangible store of value, and it gives flexibility to build later when finances are stronger.
Property is not a race. Young people should make decisions based on their income levels, career stage, and life goals, not social pressure. For some, renting while investing in skills, businesses, or financial assets, alongside gradually acquiring land, is the most rational and sustainable path.
The key is intentionality. Property should be acquired when it aligns with one’s circumstances and long-term objectives, not because of popular slogans or external expectations.
Looking ahead to next year, what are your views on the real estate sector and on business more broadly? Are you optimistic, and if so, what gives you confidence?
I remain cautiously optimistic, and that optimism is grounded in fundamentals rather than sentiment. Historically, election cycles in Uganda create a pause rather than a permanent slowdown. Once political uncertainty is resolved, deferred decisions tend to come back into the market. We see that pattern repeatedly: transactions that were postponed are revisited, capital that was sitting on the sidelines begins to move, and business confidence gradually rebuilds.
Beyond the political cycle, there are several structural drivers that continue to support real estate demand. The progression of the oil and gas sector, if it continues on its current trajectory, has the potential to stimulate activity across multiple parts of the economy, not just in energy, but in housing, logistics, warehousing, hospitality, and supporting commercial infrastructure.
Uganda also remains an attractive destination for regional and international capital. The ability to structure dollar-denominated rentals, repatriate funds, and operate dual-currency leases is a meaningful competitive advantage in the region. Returns here, while under pressure, remain compelling relative to many neighbouring markets, particularly for investors with a long-term horizon.
In terms of specific opportunities, some segments are clearly more resilient and better positioned than others. Student accommodation continues to experience structural undersupply. Affordable housing remains a significant opportunity given the scale of the housing deficit. Growth in agriculture and trade is driving demand for storage, warehousing, and logistics facilities. We are also seeing increasing momentum in secondary cities, where population growth and commercial activity are beginning to translate into real estate demand.
So, while the operating environment remains challenging, particularly from a financing and policy perspective, the underlying demand drivers are intact. For investors who are disciplined, well-advised, and patient, there are still meaningful opportunities ahead.
My final question is about urban physical planning and enforcement. From your experience, what are some basic, non-negotiable things developers should be getting right to protect the long-term value of their properties? And do you think urban expansion is happening too fast for the government to keep up?
The fundamental issue is not that Uganda lacks plans. In fact, we have comprehensive physical development frameworks at both national and local levels. The challenge lies in enforcement. Plans exist on paper, but compliance is inconsistent, and that gap between planning and enforcement is where long-term value is being destroyed.
From a developer’s perspective, there are certain fundamentals that should never be compromised, regardless of budget or location. Adequate parking is not optional; it directly affects usability and tenant satisfaction. Proper drainage is critical, particularly given Kampala’s topography and increasingly intense rainfall patterns; poor drainage almost guarantees flooding, disputes, and accelerated asset deterioration. Functional access, including proper road connections and circulation within sites, determines whether a property works on a day-to-day basis.
Noise control, waste management, and overall site planning are equally important. Developments that ignore these basics may save money upfront, but they pay for it later through high vacancy, tenant turnover, and reputational damage. Professional property management is also non-negotiable. Well-managed properties retain tenants, preserve value, and remain competitive even in difficult markets. Poorly managed ones decline very quickly.
Speaking to your question of urban expansion, yes, the pace of horizontal growth is placing enormous pressure on local government. Infrastructure, services, and regulatory capacity are struggling to keep up. But it is important to be clear, managing urban growth is fundamentally a government responsibility. That is precisely why planning frameworks exist.
What is missing is consistent enforcement. Developers will inevitably push boundaries if they believe there are no consequences. When rules are applied selectively or retrospectively, disorder becomes normalised. Over time, this erodes not just individual properties, but entire neighbourhoods. Land values suffer, infrastructure is overwhelmed, and conflicts between land uses become common.
This is where both sides must play their role. Developers need to understand that cutting corners is self-defeating. Government, on the other hand, must provide the discipline, the “stick”, through predictable, consistent enforcement of the rules that already exist. If we enforced our current plans properly, we would significantly improve the quality, functionality, and long-term value of our urban spaces without needing new laws or additional capital.
There’s a joke going around that perhaps the city owes Jennifer Musisi an apology. From a professional and industry perspective, do you think the sector misses the kind of order, discipline, and enforcement she tried to introduce at KCCA?
In my opinion, yes, there was clearly more order, structure, and predictability during that period.
Even when processes were slow, there was accountability and communication. Today, delays are common, explanations are often absent, and outcomes are uncertain.
Cities thrive on discipline and enforcement. Without them, inefficiency sets in, and long-term value is undermined.
