Reflections about the property market in Kampala.

What I have learnt about the rental property ecosystem in Kampala

Prologue

Almost a year ago, I committed to building Rentobase - a property management SaaS that was meant to simplify the daily workload of property managers and owners.

But I hit a road block - getting someone to pay for the convenience was an issue.

I cut my losses, moved on and shifted my focus to other aspects of my life.

The local property market is still attractive - a lot of chaos; which is an opportunity to solve for the shortfalls that the merchants (owners) and the customers (tenants) are facing.

So, in that regard, I decided to relaunch https://rentobase.com as a property listing web application.

The process is simple:

  • We find the property
  • List it on https://rentobase.com
  • Potential tenant views the property
  • Decides whether it satisfies their budget and taste.
  • Reaches out for inspection.
  • Deal is sealed with the owner.

The primary way of finding a house to rent in Kampala is:

  • Physically move to the locality where you would like to rent.
  • Ask around for a property broker.
  • Go for inspection if you are lucky enough to find a broker.

I believe we can alleviate the “suffering” and inefficiencies of finding rental properties.

However, there’s a rude awakening that I’ve had to experience.

1. The rental amounts do not tally with the average income earned.

Let’s look at the numbers.

ONLY ~1% of the population in Uganda earns over UGX 1 million (around USD 269) per month.

If that’s the case, one would assume that the rental amounts would reflect the national earning average… Right?

But that’s not the case. There’s a huge disparity that worries me from an economics perspective.

How are people able to afford houses whose prices are not supported by the local economy?

There’s room for imagination.

2. We (as a country) do not care about great architecture and aesthetics.

By this, I do not mean arches and castles. I am referring to the minutae; floor tile coloring, skirting, layout of the house doors, the kind of lights to be used, what kind of flowers, e.t.c.

It’s like when the owners are building, all they want to see is a concrete structure with almost zero thought about the lives of occupants that will one day occupy it.

  • Will there be natural light in the house during the day?
  • How wide are the corridors?
  • How safe is it for children as they play?

3. We have a trust problem.

This is probably one of the biggest problems in the rental market.

Brokers are listing UGX 1,000,000 houses for UGX 500,000 just to scam inspection fees from the already frustrated potential tenants.

The problem isn’t only that people get scammed. It’s that the entire market becomes harder to trust.

If a tenant sees a house advertised online, they have to ask themselves:

Is this house actually available? Is the price real? Is this broker legitimate? Will I actually see the house after paying the inspection fee?

That is a terrible experience.

And when you have to ask yourself all these questions before even seeing a house, the cost of finding somewhere to live becomes much higher than the rent itself.

Rentobase is partly a response to this.

I don’t think we can completely eliminate bad actors from the market, but we can make ourselves easier to trust by being transparent.

The campaign for Rentobase is therefore going to be simple: make finding a house less painful.

We want to build trust around the listings we publish, give people better information before they decide to inspect a property, and eventually create a marketplace where you don’t have to assume that every listing is a potential scam.

The goal is to become a place where people can actually start their house search with some level of confidence that they will get what they are looking for.

4. Owning affordable units (around UGX 500k) is better business.

There’s basically a higher number of people that are comfortable with paying UGX 500,000 as compared to UGX 1,000,000.

This in turn means better occupancy rates compared to more expensive units.

And this is where I think there is an interesting business opportunity for property owners.

A UGX 1 million house that sits empty for three months has effectively lost UGX 3 million in potential revenue.

Meanwhile, a UGX 500,000 unit that stays occupied consistently can potentially produce more predictable cash flow over the same period.

Of course, there are other factors involved - construction costs, land, location, maintenance, utilities and the quality of the property all matter.

But I think there is an assumption in the market that more expensive automatically means better business.

When you add the lack of industry regulation, it becomes a mess.

There is a massive market of people looking for decent, affordable housing.

If developers can build properties that are reasonably priced, well designed and located in areas with demand, occupancy can become a much more interesting metric than simply asking, “How much can I charge?”

All in all, I am committed to providing excellent service to customers well knowing the frustration that comes with finding a house for rent in Kampala.

Rentobase is another attempt at solving a problem I think is worth solving.