2026-02-24-莱坊-Kampala_Property_Market_Performance_Review_H2_2025_22页_9mb

Summary of Kampala Property Market Performance Review (H2 2025)

Core Content

Kampala's property market in the second half of 2025 showed resilience, driven by macroeconomic stability, contained inflation, and sustained infrastructure investment. Despite some caution due to political uncertainty and election-related risks, the market remained fundamentally strong, with notable performance in industrial and suburban sectors.

Main Points

Economic Performance

• Growth: Uganda's economy grew at 6.3% in FY 2024/25, recovering to pre-COVID-19 levels.
• Inflation: Headline inflation dropped to 3.1% in December 2025, well below the 5% target.
• Currency: The Uganda Shilling appreciated by 2.4% in 2025, reflecting strong export performance and improved investor sentiment.
• Balance of Payments: Surplus of US$2.37 billion recorded for the year ending October 2025, the highest in over 15 years.

Real Estate Activity

• Sector Output: Increased from UGX 3,323 billion in Q3 2025 to UGX 3,343 billion in Q4 2025.
• Residential Market:
  • Rental rates for two-bedroom units fell by 10%, while three-bedroom units dropped by 9%.
  • Occupancy levels remained stable at 83% in prime areas.
  • Increased supply and shifting tenant demographics affected rental dynamics.
  • Distressed property sales rose, with strong demand for studio and one-bedroom units.
• Office Market:
  • Grade A+ offices saw a strong absorption of over 50,000 sqm, but demand was largely driven by relocations.
  • Grade A and AB offices recorded a 3% rental decline and a 5% drop in occupancy.
  • The market transitioned into a tenant-favourable cycle with rising vacancy in lower-grade buildings.
• Retail Market:
  • Footfall increased by 15%, with prime malls nearing saturation.
  • Suburban retail benefited from informal trade formalisation and convenience-led formats.
  • International and regional brands outperformed due to brand strength and promotions.
• Industrial Market:
  • Strongest performance across all asset classes, with occupancy consistently above 80%.
  • Demand driven by coffee exports, oil production preparation, and FMCG/logistics activity.
  • Infrastructure constraints limited short-term supply growth.

Key Risks

• Election Uncertainty: Political risks from the January 2026 elections may impact short-term market confidence.
• Oil Production Delays: Potential delays in oil production timelines could affect long-term economic stability.
• Donor Funding Cuts: Reduced donor activity affected demand in certain segments.

Legal Considerations

• Trusts as Succession Tools: Trusts are increasingly preferred over wills for their continuity, privacy, and asset protection.
• Legal Framework: Trusts in Uganda are governed by multiple statutes, with ongoing legal reforms aimed at harmonising the framework.
• Trust Deed Importance: A well-drafted trust deed is crucial for effective governance and asset protection.

Key Information

• Economic Growth: 6.3% in FY 2024/25, expected to rise to 7.0% once oil production begins.
• Inflation: Headline inflation at 3.1% in December 2025, core inflation also at 3.1%.
• Office Supply: Over 200,000 sqm of office space in pipeline, with 50,000 sqm added in H2 2025.
• Residential Sales: Distressed properties increased, with studio and one-bedroom units seeing strong uptake.
• Residential Rentals: Two-bedroom units saw the sharpest rental correction, while three-bedroom units remained more resilient.
• Legal Trends: Trusts are becoming a strategic tool for estate planning, offering benefits over traditional wills.

Outlook

• 2026 Outlook: Market enters on a stable but cautious footing.
• Residential Market: Expected to remain subdued, with continued supply pressures and affordability concerns.
• Office Market: Likely to stay tenant-favourable, with increased selectivity and focus on quality.
• Industrial Market: Expected to continue strong performance, supported by long-term growth drivers.
• Retail Market: Suburban areas likely to outperform, with prime malls approaching saturation.

Infrastructure Developments

• Projects in H2 2025:
  • Hoima City Stadium (Urban & Sports)
  • Kabalega International Airport (Aviation & Logistics)
  • EACOP & Upstream Oil Projects (Energy)
  • Kampala City Roads Rehabilitation (Urban Transport)
  • Nakivubo Channel Redevelopment (Urban Renewal)
  • Standard Gauge Railway (Rail & Logistics)

These developments are expected to drive long-term real estate demand and spatial growth.

Market Sentiment

• Cautious Approach: Buyers and tenants adopted a wait-and-see stance ahead of the elections.
• Short-Let Market: Continued growth, especially in secondary neighborhoods, but with increased selectivity.
• Investor Activity: Focused on rental income rather than capital appreciation, with a preference for smaller, more affordable units.

Conclusion

Kampala's property market remains resilient and well-supported by strong economic fundamentals. While short-term risks such as political uncertainty and oil-sector developments persist, the long-term outlook remains positive, particularly for industrial, suburban office, and convenience retail assets. The adoption of trusts for succession planning is gaining traction, reflecting a shift toward more sophisticated estate management practices.