Kampala’s real estate market is at a critical juncture, with shifting consumer trends, regulatory developments, and economic forces shaping the landscape. As we move into 2025, the recently released H2 2024 Kampala Property Market Performance Review by Knight Frank Uganda provides a detailed analysis of challenges, opportunities, and emerging trends that will determine the best investment strategies for the future.
With Uganda’s economy experiencing a solid 6.5% growth rate, surpassing pre-pandemic levels, the real estate sector continues to evolve. However, investors must navigate a complex landscape marked by shifting demand patterns, rising construction activity, and emerging opportunities in previously overlooked segments.
This report serves as an investor’s guide, breaking down the key insights from the Knight Frank study, including areas of concern and the best places to invest your money in 2025 and beyond.
The Challenges: What Investors Need to Watch Out For
While Kampala’s property market continues to show resilience, it faces several pressing challenges that investors should carefully consider before making commitments.
1. A Sluggish Prime Residential Market
One of the key insights from the report is the declining demand for prime residential units in traditional high-end areas such as Kololo and Nakasero. Occupancy rates fell from 84% in 2023 to 82% in 2024, signaling a gradual migration to secondary suburbs where better-priced, modern housing options are emerging.
Furthermore, sales activity in prime residential areas remains slow, with many high-end properties staying on the market for extended periods due to limited buyers.
2. Office Space Oversupply and Rising Vacancy Rates
Kampala’s commercial office market is facing a looming oversupply. With over 100,000 sqm of new office space expected in 2025, vacancy rates are likely to rise further, particularly in Grade B buildings.
Despite demand remaining stable for Grade A office spaces in Nakasero and Kololo, some businesses are relocating to smaller, more affordable offices or converting standalone properties into office spaces in areas such as Bukoto and Ntinda.
The government’s rationalization policy, which has seen the merging or abolition of various ministries and agencies, is another factor affecting demand for office rentals, as vacated government-leased office spaces add to the oversupply.
3. Retail Sector Faces Changing Consumer Behavior
The retail sector in Kampala remains resilient, with occupancy levels rising to 82.4% in major malls. However, the report highlights a 5% decline in foot traffic, suggesting shifting shopping patterns driven by:
- The rise of neighborhood malls in commuter towns such as Kyanja, Najjera, and Kira is drawing consumers away from larger malls in central Kampala.
- Increased online shopping and digital transactions reduce the need for physical store visits.
- The introduction of paid parking fees in some malls may discourage casual shoppers.
4. Industrial Land Constraints and Old Warehousing Challenges
Uganda’s industrial sector remains strong, but investors looking to enter this space face a shortage of affordable land in key industrial hubs such as Namanve, Nakawa, and Kawempe.
Furthermore, while demand for warehouse space is rising, many older properties require significant upgrades to meet modern industry standards, creating a buyers’ market where properties take longer to sell.
Where the Investment Opportunities Lie
Despite these challenges, several sectors of the Kampala property market present strong opportunities for investors looking to make smart moves in 2025 and beyond.
1. Secondary Suburbs: The New Residential Goldmine
As demand for prime residential housing slows down, investors are turning their attention to secondary suburbs such as:
- Lubowa and Munyonyo – attracting high-net-worth individuals seeking quiet, green neighborhoods with good infrastructure.
- Kyanja, Najjera, and Kira – emerging as strong alternatives to Kololo and Nakasero due to affordability and modern housing developments.
- Mbuya and Naguru – offering mid-to-high-end residential units preferred by expatriates and diplomats.
With Kampala’s expanding road network, these areas are becoming increasingly accessible, making them attractive for both developers and home buyers.
2. Industrial Property: Warehouses and Cold Storage Facilities
The industrial sector is experiencing increased demand for warehousing and storage facilities, especially those located close to the CBD and major transportation hubs.
- Warehousing space in Namanve Industrial Park and Nalukolongo is expanding, with over 100,000 sqm currently under construction.
- Cold storage facilities are in high demand due to the growth of the agro-processing, pharmaceutical, and food supply sectors.
Investors with access to large industrial land parcels can benefit from developing state-of-the-art warehouses that cater to businesses looking for modern, well-equipped storage spaces.
3. Commercial Retail in Commuter Towns
With larger malls in Kampala experiencing reduced foot traffic, neighborhood retail centers in areas such as Kira, Kyaliwajjala, and Makindye are becoming more attractive.
- Developers are investing in neighborhood malls that offer convenient shopping for residents in these growing suburbs.
- Retailers are expanding into these commuter areas, creating strong leasing opportunities for investors.
- New international brands such as Skechers and USS Polo are planning store openings in Kampala malls, showing continued retail sector confidence.
4. Serviced Apartments and Short-Term Rentals
The demand for furnished apartments and short-term rentals is growing as more expatriates, business travelers, and diplomats seek flexible housing options.
- Naguru, Muyenga, and Mbuya have seen increased demand for high-end serviced apartments.
- Technology-driven rental platforms (Proptech) are making it easier for landlords to attract short-term tenants.
Investors can benefit by developing or repurposing properties into serviced apartments targeting this niche market.
Key Takeaways for Investors
With 2025 shaping up to be a year of strategic real estate investments, here’s where smart investors should focus:
✔ Invest in secondary residential suburbs – Prime areas are oversaturated, but affordable, high-quality developments in emerging suburbs will attract demand.
✔ Capitalize on the industrial sector – Warehousing and distribution centers are highly sought after, especially with modern facilities.
✔ Explore neighborhood retail investments – As consumer shopping habits change, commuter towns will drive retail growth.
✔ Focus on serviced apartments – Business travelers and expatriates are fueling demand for short-term rentals.
✔ Monitor the office sector carefully – With an oversupply looming, investors should prioritize premium office spaces in strategic locations over lower-grade buildings.
Final Word
Kampala’s property market is undergoing a significant transformation, and while challenges persist, savvy investors who adapt to market shifts stand to gain significant returns.
The Knight Frank H2 2024 report offers valuable insights for both local and international investors looking to capitalise on emerging opportunities while navigating market risks.
As 2025 unfolds, those who make informed, strategic investments will reap the rewards of a growing, evolving real estate market in Uganda’s capital.