By Our Reporter
The Global Tax Report compiled by property consultant Knight Frank and Ernest and Young for the period between 2012 and 2015 has shown the residential market in Uganda continues to suffer as mortgages are becoming more unaffordable for Ugandans. This has been attributed to a rise in interest rates from 16% to 30% in 2012 through 2013 and still remain high in 2015. This has led foreign investors to explore new investment destinations in key global cities such as Shanghai, Miami, Dubai and Paris.
Knight Frank Uganda Managing Director Judy Rugasira says, “With the rates of price growth slowing down in several global city markets, transaction costs and taxation are becoming increasingly important considerations for investors. When purchasing property as an investment, tax is not necessarily the first concern but it is important because it is often the after-tax return that measures the success of the investment.”
The report indicates that political and economic climates in global cities has also had an effect on property markets.
“Political stability is important to any investor. With less than two years to the French general election, President Hollande appears to be following a moderate path which could see France emerge once more as the lifestyle destination of choice. In Dubai, commentators expected the Dubai Land Department to raise transfer fees which has failed to materialize. The softening of residential prices has given the authorities to increase the burden of transaction costs. The 4% transaction fees in Dubai compared to other markets, makes it an attractive destination for foreign investors,” she adds.
