Land vs Unit Trust vs Treasury Bond: The Best Long-Term Investment in Uganda?
Alex Kakande
By Alex Kakande
Yesterday’s discussion on the long-term capital appreciation of land/RE was truly valuable. In Uganda, many of us have invested heavily in real estate because we believe it is the best low-risk, low-activity investment. But what does the data say?
In this series of articles, we will focus on a particular class of Ugandans with ready cash to buy everything and particular locations. Prime locations like Kyanja, Kungu, and Kira are some of the best places to buy land for capital appreciation.
Case 1:
In July 2015, a plot of land in Kyanja was selling for 380 million shillings. This is the quoted public price, but My research indicates that such a plot sold for between UGX 300 million and UGX 350 million. For this discussion, let’s assume the price was UGX 300 million.
Quoted price of 60 decimal plot in Kyanja
From an online survey and in some groups I’m in, I asked how much would this plot of land go for right now, 9 years later, and answers ranged from 500 Million to 700 Million.
My closest estimate of the current sale price might be around 600 million shillings at the lowest and 750 million shillings on highest. This means that a plot of land that cost 300 million shillings in 2015 (as above in picture) is now worth at least 600 million shillings, doubling in value. At best, it is worth 750 million shillings, a significant increase.
What if you had invested this money in other products? What would have been the return?
Unit Trust: If you had invested 300 million shillings in a unit trust with the lowest return over the same 9 years, you would now have 780 million shillings with an average return of 10.5% per annum. With an average return of 11.5% per annum, you would have 870 million shillings.
Treasury Bond:
If you had invested 300 million shillings in a treasury bond in 2015 (the comparable bond at the time, UG0000001517, had a coupon of 17% for a 10-year treasury bond issued in 2015), you would now have around 1.7 billion shillings in total bond value with compounded coupon investment.
Now the goal is yours: Where do you want to invest next if you have cash at hand and your goal is to invest for the long term (over 10 years)? Buy land, invest in a unit trust, or invest in bonds?
Land vs Unit Trust vs Treasury Bond: The Best Long-Term Investment in Uganda? Pt-2 28.10.2023
Yesterday’s discussion centered around Kyanja, a prime location which has seen its value grow exponentially, but even then we saw some interesting figures. Today this post is going to Look at Sonde and Namugongo for these select three plots of land I got. What does the data say?
Case 1:
In November 2014, a plot of land in Sonde was selling for 16 million shillings. And one of my followers bought it for 16 million. a 50*100 plot of land. This is what we have verified and was paid.
From the same inquiries, that same plot of land now is going between 60 Million – 70 million Uganda Shilling.
What if you had invested this money in other products? What would have been the return?
Unit Trust: If you had invested 16 million shillings in a unit trust with the lowest return over the same 9 years, you would now have 48 million shillings with an average return of 10.5% per annum. With an average return of 11.5% per annum, you would have 54 million shillings.
Treasury Bond:
If you had invested 16 million shillings in a treasury bond in 2014 (the comparable bond at the time, UG0000001517, had a coupon of 17% for a 10-year treasury bond issued in 2015), you would now have around 97 Million shillings in total bond value with compounded coupon investment.
Based on the data, we can see that the investment in this plot of land made more money than the Unit Trust, but Treasury Bonds still have a slight lead. However, the difference between Bonds and Real Estate is only around 25-30 million Ugandan shillings, which is significant.
This highlights that land is not the only investment that can make money in Uganda right now. It is important to diversify your investments to reduce risk and maximize returns.
Going forward, I would recommend investing in a portfolio of assets that includes both land , Unit Trusts and Treasury Bonds. This will allow you to benefit from the potential for capital appreciation and income generation from all asset classes.
Ultimately, the best investment decision for you will depend on your individual circumstances and risk tolerance. It is important to do your own research and consult with a financial advisor before making any investment decisions.
I hope you have a great week and potentially invest in Uganda’s Capital Markets.
Alex Kakande is a finance and investment analyst with over 7 years of experience in Finance. He is passionate about helping Ugandans invest and grow their wealth, and is a regular speaker and writer on topics related to finance and investments
About Post Author
