Rentals not a smart investment, says Katikkiro Mayiga 

The Katikkiro of Buganda, Charles Peter Mayiga, ignited an online debate on Monday morning, cautioning against residential rental property investment in Kampala. The cultural leader warned that while investing in rental bungalows might be safe, it is decidedly not smart. 

His comments prompted swift and varied responses from investors and the general public, challenging his financial arithmetic.

Controversial Math

Mayiga based his view on conservative calculation of return on investment 

 He used a hypothetical example of a small residential bungalow, stating that if it cost Shs 100 million to build, it would struggle to fetch more than Shs 0.5 million per month in rent.

“That means it would take at least 16 years to recoup the 100m/- (without considering tear and wear, and possible periods without occupancy),” he wrote.

Online Debate: Safety, Location, and Generational Wealth

Many, however, reacted, pointing out that Mayiga’s calculation lacked key variables. 

Andrew Akech argued that the first priority for any great investor must be “safety and security”, which the rental business undoubtedly fulfils. 

Akech stressed that smart investors conduct a thorough cost-benefit analysis and feasibility study before construction, highlighting that location is paramount.

“We have places where a single bedroom is over 1m and other places the same house goes as low as 250k. This is where investor's knowledge is tested,” Akech wrote. 

He also introduced the concept of generational wealth, noting that land in Uganda appreciates constantly, providing an alternative of re-constructing the property to meet fast-growing demand.

Ray, another user, added a more pointed observation, accusing the Katikkiro of “rage baiting,” and questioning who would rent a bungalow near the town centre for less than Shs 1 million. 

“Real estate with this young vibrant population is the safe bet as things stand. Even if war breaks out... rentals stay,” Ray contended.

Uganda’s Persistent Housing Gap

The debate comes amid Uganda’s persistent and significant housing crisis. 

Recent studies indicate that the country faces a national housing deficit of approximately 2.4 million units. While this shortfall is substantial, the argument shifts to the efficiency of private investment in solving it.

Some contributors offered alternative philosophies for engaging with the property market. 

Hassan Jjingo argued against the sole focus on profit retrieval, stating: “This type of investment is all about the life sustainability without struggling not making profits.” 

Meanwhile, Abbas Kazibwe suggested the investment wouldn't be poor if the money used was purely profits rather than initial capital or borrowed funds, shifting the focus from the asset’s returns to the nature of the funds used.