Don’t ignore real estate because you have little money to invest

By Livingstone Mukasa

In 2018, at the invitation of Uganda’s Ministry of Finance, I found myself in Munyonyo Speak Resort at a High Growth Conference.

This was no ordinary meeting. Uganda’s economic brains were on display and all multi-sectoral players and development partners sent their top honchos. You could look in the audience and spot many who have a say in how Uganda’s economy is run.

Soon it was the turn for the IMF Country Director to prescribe how Uganda could achieve faster and inclusive growth. First, she had some observations to make that blew me away.

The IMF had conducted in-depth research on where Ugandans invest if they have some disposable income. The research found that 70% of all available resources end up in brick-and-mortar investments as homes and commercial buildings. This is way higher than the global average of 40%.

In Business, we say the market cannot be wrong and if you try to prove the market wrong, it will only lead you to Bankruptcy.

You see real estate is a store of value and a hedge against inflation and intrusive bankers and regulators. Yes if you have a couple of billions in the bank or treasury Bonds, strange things might start happening to you. So most people prefer to use real estate to store and sometimes hide their wealth in brick and mortar.

So what does this mean for you? First, as long as our population is increasing rapidly and as long as people are creating wealth that needs to find a store of value, real estate prices and housing in particular will see phenomenal growth and those that are at the right intersection of this flow will make a killing. It’s also a generational asset that many aspire to leave behind for their offspring.

In most cases it’s not that you can’t afford to buy land, it’s that you want to buy it in places you can’t afford. That’s the lesson for the day.

The writer, Livingstone Mukasa is the CEO of Four One Financial Services Limited