By Moses Oketayot
Two weeks ago, the National Social Security Fund (NSSF) launched the USD400M Solana Housing Project in Lubowa Wakiso district. The President was the chief guest on the day.
According to the NSSF, the 2,750 units project which contains mixed-use housing and commercial developments aims to attract the middle class and first class in that the cheapest unit will start from USD50,000 approximately Ugx574.5m, and the highest cost unit going for USD800,000 approximately Ugx1.5b, which raises the question of affordability.
The properties will be sold with a rent-to-own model. Interested buyers can make a down payment on the property (20% of the total cost), start living in the house, and begin to pay rent. We are doing this to help on the demand side.
The Fund currently has only 7% of its investment portfolio in real estate with 70% in fixed income, equities 15%. Richard Byarugaba, the Fund’s managing director says that the reason why they are investing in real estate is to get a good return on investment, to diversify the investment portfolio, and to have an impact on the economy through employment.
When asked about the affordability of the houses being constructed at Temangalo; Byarugaba had this to say: “The World Bank says that an affordable house should cost between USD50,000and USD95,000. Low-cost housing is between USD15,000 and USD49,000. There will be a house for Ugx90,000,000 for a starting unit.
Relatedly, parliament recently passed the National Local Content Bill with the intention of among others, imposing local content obligations on a person using public money or utilizing Uganda’s natural resources or carrying out an activity requiring a license to prioritize Ugandan citizens and resident companies owned by citizens in public procurement. The Temangalo phase one project employs around 700 Ugandans, and most of the materials are being supplied by Ugandan companies like Hima for the cement, and Roofings Limited for the iron and steel materials according to the contractor Henan Guoji.
However, going by the fluctuating inflation rate (9.3% as at end of August) the final price of the units according to Byarugaba, and with the country still recovering from Covid-19 economic aftershocks, it remains to be seen how the Fund will find potential buyers for the residential projects in a country where a big percentage of the population still in the informal sector.
The Fund’s other real estate projects include Citadel Place, a modern contemporary housing project with 40 high-end apartments in Mbuya; and the Offtaker Project, an affordable housing estate comprising 160 housing units in Kyanja.
Commercial projects include Pension Towers an intelligent and modern commercial complex comprising of 32 floors, and Mbale City House currently under construction.
Others are Mbarara and Jinja City Houses, 2 modern retail and office buildings; Workers House and Social Security House in the heart of Kampala.