How Airbnb boom is reshaping Kampala’s property market

Kampala’s short-term rental market has expanded rapidly into an Shs83 billion-a-year business, but a growing wave of new apartments is threatening to erode returns as competition intensifies, a new property market report has found.

According to Knight Frank Uganda’s Kampala Short-Term Rental Market Report 2026, the number of active Airbnb listings in the city rose by 56.7 percent in 2025 to reach 3,478 properties, reflecting growing demand from business travellers, development workers, tourists and the Ugandan diaspora.

The report estimates that the visible Airbnb market alone generates about $22 million (approximately Shs83 billion) in gross annual booking revenue before deducting expenses such as platform commissions, utilities, maintenance, staffing and taxes.

On average, each listed property earns about $6,333 (Shs24 million) annually, although Knight Frank cautions that this represents gross revenue rather than profit.

The report says Kampala’s short-term rental market has evolved from a niche accommodation option into a significant segment of the city’s hospitality and real estate industry, driven by landlords abandoning traditional long-term leases in favour of furnished apartments targeting flexible stays.

However, the consultancy warns that rapid expansion is beginning to outpace demand.

More than 1,000 new apartments are expected to enter Kampala’s prime residential neighbourhoods over the next two years, with many likely to be converted into short-term rentals, increasing pressure on occupancy levels and rental rates.

“The market has moved beyond the speculative phase and is becoming increasingly professional and competitive,” the report states.

Knight Frank notes that simply owning a furnished apartment in an upmarket suburb is no longer enough to guarantee bookings.

Instead, guests are placing greater emphasis on professional management, reliable utilities, cleanliness, fast communication and positive online reviews when choosing accommodation.

“A well-managed apartment in Kyanja can outperform a poorly managed unit in Kololo,” the report says.

The study found that the average booked nightly rate across Kampala stood at $39, while median occupancy was only 44 percent, meaning the typical property remained vacant for more than half the year.

Revenue per available rental averaged $16.70 per day after accounting for both occupied and vacant nights.

Knight Frank says the actual size of Kampala’s short-term rental market is likely much larger because many serviced apartments and furnished homes are booked directly through property managers, corporate clients, travel agents and referrals rather than online platforms such as Airbnb.

The report identifies Kololo, Nakasero, Naguru, Munyonyo and Muyenga as the city’s premium locations, attracting diplomats, United Nations agencies, embassy staff and corporate executives willing to pay between $80 and $120 per night.

Neighbourhoods such as Bugolobi, Bukoto, Mbuya, Entebbe, Buziga and Kigo are emerging as attractive alternatives, offering lower entry costs while serving NGO workers, diaspora visitors and regional business travellers.

Meanwhile, Kyanja, Kisaasi, Ntinda, Najjera and Kira have become popular with domestic travellers and budget-conscious international visitors because of lower property prices and expanding modern apartment developments.

Unlike many African cities where leisure tourism drives demand, Knight Frank says Kampala’s market is sustained mainly by business travel, diplomatic missions, development organisations, regional trade and medical tourism.

Uganda recorded 1.37 million international visitor arrivals in 2024, up from 1.27 million in 2023, providing a growing customer base for short-term accommodation providers.

Nevertheless, the report warns that reductions in international donor funding and the downsizing of some development agencies are beginning to weaken demand from expatriate workers, particularly in high-end neighbourhoods such as Kololo, Nakasero and Naguru.

Knight Frank advises operators to diversify beyond Western expatriates by targeting regional business travellers, corporate clients and diaspora visitors.

The consultancy also expects government regulation of the sector to tighten.

Although Uganda has no dedicated licensing framework for short-term rentals, operators are required to comply with existing tax, tourism and business registration laws, while the Uganda Revenue Authority is increasingly using digital systems to improve tax compliance.

Knight Frank says early compliance with tax and tourism regulations could become a competitive advantage as oversight of the sector increases.