Judy Rugasira Kyanda is the Managing Director of Knight Frank Uganda, a real estate consultancy firm. The chartered surveyor and land management specialist with over 25 years of real estate experience on Wednesday, 04 August 2021, appeared on Robert Kabushenga’s #360Mentor, a show on Twitter. Below she answers key questions concerning the future of the real estate industry in Uganda. Robert Kabushenga is JK while Judy Rugasira is JR

RK: Our guest tonight is a long-time friend called Judy Rugasira Kyanda, a guru in property management. She is the Managing Director of Knight Frank Uganda. Good to have you on the show, Judy

JR: It is a pleasure to be here Robert. Thank you for having me.

RK: Many people are hearing about you for the very first time, could you tell us about yourself. How did you end up a surveyor? At the time you made you made the choice, what was in your mind when you studied surveying and later on property management?

JR: It was my father’s idea. He suggested that I study land management. I told him I didn’t want to become a farmer. He explained to me that the name was deceptive and that the course had much to do with built economics and that. When I came back on holiday, he took me to visit three elders in that field. One was of them was Hon. Stephen Bamwanga, Hon. Bagaine  and another one I cannot really remember who were on top of their game at the time. I did some work with them and realised I could do something with them. After my vacation I went to the University of Reading and I did land management and development which is a deceptive name. It’s really everything to do with property valuation, property finance, the build environment and everything in that line. When I graduated, I came back and became a land manager, a value and now a chattered surveyor,

RK: First of all you are one of the few female CEOs of a top notch company, a multinational actually, how did you get there?

JR:  When I came back to Uganda I joined the Associated Consulting Surveyors which is Hon. Bamwanga’s firm and worked with him for 5 years and I got to learn the ropes and understand the market. I knew the dos and don’ts. I went back to the University of Reading to do my masters (Mse. In International Estate) and the plan was to come back and try out on my own. But I was head hunted by Knight Frank UK. They headhunted me from uni. They came to uni –recruiting. They needed someone to run the Uganda office. At the time I wasn’t really sure. Ironically at the time when I finished my undergrad, I sent out about 120 applications and all of them rejected me. Knight Frank was among them. I thought it would be good to look them in the eye and tell them I was not interested.

 I toyed with the idea, do I start my firm or do I join Knight Frank and after a lot of deliberation, I realised it was just pride. Having my name on the door would massage my ego but realistically speaking, it was going to take me a lot longer to gain momentum and have a ground. I decided to join Knight Frank as a director at the time and as an MD. I started off heading the valuation department. I don’t think it was a bad decision that I made. We are celebrating 21 years this year under my watch.

RK: You currently command the majority market share in the property management business, aren’t you?

JR: With humility yes, we are. We are the biggest property consultancy firm. And there’s a difference. I can’t compete with people like Mera investments but they are property developers. But yes we are the biggest and probably the oldest global firm.

RK: Let’s go straight to learning, people here just want to learn, people want  to know  what to consider from somebody who wants to do rentals, popularly known as mizigo and want to own a personal house or a big block of apartments, how can they make judgement that it is a reasonable investment. What other things do you look at? How would I know that I am making a good deal on a property?

JR: At the end of the day, it’s a numbers game. It is all about the numbers.  What are you expending? How much are you putting out there? What are you going to get in return to it? How much do you have at your disposal? You don’t need to have all the money to acquire a property. In fact with 10 or 20% down payment, you can get the property you want with financing but this brings in another dynamic:  debt.

RK: Take us slowly Judy like hot porridge, let’s hold on the debt thing. First tell us the money we should have. What do you look at?

JR: Affordability really. How much do you have versus how much you want? Because if you have UGX 100M, you will have to look for a property that fits in that exact amount of money. The other type of question you need to ask yourself is; what type of investor am I?

RK: We all just look at the rental income but you are saying owning property can provide other opportunities like what?

JR: You can use that property for refinancing and getting more money. As you go on reducing on your debt, you can refinance. You can get more debt because you have more equity available for you on that property and that can enable you to do other business ventures.

RK: What you are saying is that you are encouraging people to considering investing more in to property.

JR: It does. Unlike investing in wasting assets, cars or whatever, those are wasting assets. If you are dishing out more than you are gaining, that is a liability you shouldn’t be gaining into. If it is a short term liability where by you know that you are going to pay interest for certain number of years but know that it is going to appreciate in value and you are going to get a rental income and increase your profit, then that’s fine. But your ideal target should be to invest in a property where by there is going to be an income stream coming from that property.

RK: If I had UGX 500m to buy me a 4WD somewhere near my former workplace. That or go to buy an apartment somewhere in Najjera. What do those choices look like to you?

JR: Definitely, no brainer. You go for that apartment and get your 8 or 9 % on that and get your income stream and your property is going to continue appreciating every other day. If you buy that car, I cannot attach the emotional value from it but after 5 years, you write it off.

RK: Let me take you to debt. Talk about using debt to pay for a property.

JR: If you don’t have enough money to go and buy a house for example, you will be required by the bank to put down a payment of about 20% and then you can borrow the remaining 80% from the bank (if you are legible). You will acquire that property until you finish paying off that debt. But before you get in this debt, it is wise to do the numbers. Find out what rental income you are going to get out of it. If you are going to live in it that’s a completely different issue. You are buying it as an owner and occupier and it is okay for you to live in it. Make sure you have the right numbers and your salary is enough to cover your mortgage and you shouldn’t be paying more than 35% of your salary on rent or equivalent of your mortgage.

RK: Please explain it again to our salaried people how they should pay this debt.

JR: If you are renting a house, ideally you should not be paying more than 30- 35% of your income on rent.

RK: Which means this should guide you on how much you are willing to pay on the mortgage?

JR: Yes. Depending on the cost of the house and the interest they will be charging you. You need to sit down and crunch those numbers and make sure that you can actually afford to pay that loan. Otherwise, if you don’t, you are going to lose your deposit and also you are going to lose your house. Make sure;

  1. You have job stability
  2. You have a constant flow of income and you are able to keep up with your loan repayment so that you don’t have to lose your house.

If you are buying a property as an investment and you are using debt, you want to target a return of more than 12% or more.

RK: Why?

JR: Because you are making sure that you will be able to make an income flow that will cover your mortgage repayment. You want the rent you are going to get from your property to cover your debt repayment with minimal subsides from yourself. If you are getting a 12% return, within 8 years you pay off the bank and the house is yours.

RK: I want to take you to another issue. Someone has gone into property and they have got mizigo, shops or arcade, what are the typical obligations that end up being costs for the owner of the property?

JR: From the outset, you have to pay off the agent/ broker who has found you the house. You need to pay their fees. Commercial properties are more complicated depending on the type of lease that you sign. For a residential house, the tenant takes care of the internal repairs and renovations if they are not major. The landlord takes care of the external work. If they need to repair the drive way, replace the tanks or fix the gate or things like that. If the property is insured, taxes and all statutory rates that is still the landlord.  Utilities are for the tenants.

RK: There are many people who are part of investment clubs and many of them are investing in land and property. What I have noticed is that a lot of the members do not know much about real estate investment. They get led by a small group probably that knows about the business. If I am a humble saver, how would you advise me? What the red flags to look out for in the real estate?

JR: You can make some very bad real estate investments and we have seen some which have gone terribly wrong. This is mainly because of people who have gone into real estate blindly. Your brother invests in a hotel, you also follow suite. Only that you are going to invest it in the middle of nowhere and all. For example this is not the time to build a hotel. That would not be a good investment to make. The mistake people make is that they do not do enough research to what it is that they are going to invest in. Talk to a professional to give you data backed research to give you the actual information.

RK: What are real estate professionals called?

JR: In other parts of the world, they call them estate agents. It is a term that has been abused here and I don’t want to use it.

RK: You are not talking about brokers here?

JR: No. I am talking about professionals. Lawyers do not know much about real estate. There are real estate professionals. It can get very complex as you break down the details.

RK: Let me take you to land, there are people who buy land and wait for it to appreciate

JR: That is a safe investment, Robo. If you have the money and you can keep the land away from squatters and the guys from Nasser road then you have a good deal.

Comrade Otoa: It is now a fad for people to build apartments to sell than rent, is it the in thing or what?

JR: It depends on what you want. Some people are just property developers. They do not build property to hold on it. They just do it for the business. Others do it for an income stream. And they want that income stream. The pandemic has waken people up to real estate ownership versus renting. When times became really difficult and people could not pay rent they thought twice about paying rent. That is why people have come out to think of owning their own property.

Yvonne Lugali: What are the pros and cons of buying condominiums versus buying land?

JR: Obviously it will be driven by what your personal preferences are. Some people prefer their privacy. They would rather be on their own. The costs involved in the stand alone property are not shared by any other person. There is safety in numbers. Shred community is usually has better security than stand alone.

Tio Kauma: For people that are part of investment groups that have got excess cash that they would like to invest in real estate, in your perspective, what are the other real estate investments that would be worth investing in?

JR: I am glad people are moving away from the usual asset classes. One of those is education.  We should not look real estate in the pandemic. This is not permanent. We do not have anywhere near enough accommodation at tertiary level. Senior housing is another one we need to look into. Health care is another. Agriculture too. Food security is becoming a big challenge for many. Land is a finite product. We need to utilise what is left very well.

Richard Okello: Is retail real estate something we can look at in the longer term or investors are supposed to look somewhere else?

JR: It is going to be a long time coming. E-commerce is not yet a big deal here. It will take some time.

Solomon Tumwesigye:  If you have a good location that is good for commercial, residential and hostel, what do you go for?

JR: There is a shortage of hostel accommodation. But it would be better to have a business centre to it.

Richard Ssenkungu: If you are investing in property in rent, what would be the best payback period for a property to be considered a good pay back period for rent? 2) What opportunities should people be looking out for?

JR: City limits are expanding. We need satellite cities. See where the infrastructure are going, that is where the development is going.

Blessing Arinaitwe: What are the taxes involved in real estate?

JR: Rental income tax. Capital gains. VAT and it’s better to get it done now. Budget for it.

Anthony Kagaba: What does Judy think about short stay versus long stay? 2) Would you advise B&B? 3) What’s your take on land sold on gentleman’s agreement?

JR: Long stay is more attractive. It is a safer investment. But if you have high traffic, short stay is something to go for.

2) B&B is the way to go.

3) Unregistered land comes with a lot of problems. It may look cheaper but avoid it.

RK: What are the opportunities in mass housing? 2) What is the future of real estate for the economy?

JR: Affordable housing is something that has been discussed at length over the years.  We have a deficit of 250,000 units a year which we are failing to service. We need to think about affordable houses. Affordable housing is something that can only be done to scale if it is going to be done well.

At the moment we have less than 15 mid-sized property developers in Kampala who are delivering about 700 units a year in the greater Kampala area. The key driver is loan recovery for borrowers.

Property rights are a barrier to providing affordable housing. Our customary tenure system makes it   difficult for people to pledge such communal land for a personal land for example.  Our land is also fragmented which limits development on a large scale.

Post Covid, real estate is going to bounce back. It is used to this. We just need some consistency in business. If we can quickly get the vaccination rolled out and we can get back to the assembly of normalcy. Once we get that, the economy will pick up and so will the real estate sector. But the future is bright.

RK: Thank you Judy. We have had over 700 accounts switched on.

JR: Thanks for having me. Thank you to everyone who tuned in.