PICTURES: NSSF Sh1tr Lubowa Project Starts

National Social Security Fund (NSSF) boss Richard Byarugaba, on Wednesday Nov. 13  unveiled a master plan for the construction of $400 million 2, 741 housing units in Lubowa estate, their biggest project ever as the retirement fund seeks to benefit from high returns in the real estate market.

National Social Security Fund (NSSF) boss Richard Byarugaba (L) at the project launch.
National Social Security Fund (NSSF) boss Richard Byarugaba (L) at the project launch.

Construction of the high-end homes is expected to be started in 2014 by SBI International and TMA who are the design consultants.

“Am so glad to announce that we are now ready to embark on the development of the Lubowa Housing Estate project, one of the most ambitious real estate construction pprojects in Uganda’s history,” Byarugaba beamingly said to RedPepper Online edition.

The cash raised will accelerate NSSF’s asset growth by tapping into a decade-long boom in the real estate sector even as returns from stocks, another key asset class that the provident fund has invested billions in, continues to falter.

“We have gained because the land has appreciated in terms of value but we have also lost some opportunities because we did not invest early,” Richard Byarugaba, the Fund’s managing director told a press conference at the estate on Nov. 13, adding the officials then acquired each plot (100ft by 100ft) at Shs 50 million each, but the value of the same has now jumped to over Shs 400 million.

He said the development of the estate is in line with the Fund’s continued efforts to give its members a competitive return on their savings.

DSC_8073The real estate project, which will take 10 years, will be developed on the Fund’s 565 acres of land along Entebbe and will be one of the most upmarket housing estates in Uganda.

The project is planned as a mixed use development with residential housing, commercial facilities inclusive of office parks, retail, school, hospital among other developments. The housing units that will be constructed are apartments, town houses, Bungalows and Villas, which are suitable for middle to high income earners.

Highest possible returns

A source who is a managing director at reputable real estate firm in town, estimates that land in the prime location would ‘easily exceed Sh500 million per acre’.

Sources at the NSSF said the number of apartments to be constructed would be guided by consultants, but noted that the fund was keen to earn the ‘highest possible returns’ from the prime plot.

Apart from the multi-billion shilling project, NSSF is also said to be scouting for investors to help develop middle-class homes in land in Ndeeba, Arua, Gulu, Hoima and Mbarara, which was bought during the tenure of former managing director David Chandi Jamwa in a joint venture meant to limit the amount of funds tied up in the real estate projects—which tend to be long-term.

High returns from the property market has seen the fund invest billions of shillings in the development of its prime land. Rules have, however, limited NSSF’s investment in property as an asset class to 2 per cent.

In the past three years, the Fund has doubled its assets from Shs 1.7 trillion in 2010/11 to Shs 3.4 trillion in 2012/13. Up to 81% (Shs 2.8 trillion) of the Fund is currently held in fixed income securities, while the real estate investments account for only 12% (Shs 405 billion) and Shs 259 billion is held in equities.

Purchase process
Byarugaba said the houses will be sold on the open market to both the Fund members and the general public.

The design stage, according to Byarugaba, will include the development of a master plan for the entire area, a detailed design of the housing units and other associated amenities that match a self sustaining neighborhood and will be agreed and approved by NSSF before proceeding to the development stage.

The surrounding environment is appeasing and above all, security will definitely be up-front.

Hands untied

In May, Byarugaba had complained that his work has been made hard by the bureaucratic processes involved whenever the fund is trying to develop something.

“I am constrained,” he said crossly, “it takes at least two years to get a contract [awarded]. Look at the Pension towers where we had reached, now we went back to zero.”
“Whether the PPDA helps or not is another question,” he added.

But now the ambitious Byarugaba has the last laugh after the projected received approval from the Fund Board, the Ministry of Finance, Planning and Economic Development and Wakiso District Administration while the Environmental Impact Assesment (EIA) is in the final stages of approval by the National Environmental Manangement Authority (NEMA).

New look Fund

Despite the appealing plans, NSSF’s image as prudent investor has been dogged by several scandals ranging from Temangalo, Nsimbe Housing Estate along Masaka road and several others in which savers have lost billions of their life’s savings. Early this year, the IGG cancelled the tender of Shs 132bn for the second phase of NSSF’s Pension towers over procurement flaws.


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3 thoughts on “PICTURES: NSSF Sh1tr Lubowa Project Starts

  1. Housing speculation will bring down NSSF as it did to US banks. Does NSSF get approval to spend hard working Ugandan’d retirement benefits just like that wasn’t Temangalo a good eye opener ??

  2. This project, like many other real estate projects is likely to struggle. And its for one reason, current interest rates for mortigage don’t favour this industry and kind of investiment growth. Good luck NSSF, just like the proposed Nakawa Satellite city, all to be ready in 10 years, I highly doubt it.

  3. Really? Mr. Byaruhanga? 100ft by 100ft is UGX 400m? In Lubowa, a piece of land where is even services are yet to be put in place?

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