MY WEEKEND INSIGHTS
12th October, 2024

THE ONGOING FIB-LAND IS NO LONGER THE BEST INVESTMENT

Hello everyone,

First, I want to apologize for my hiatus from these weekend insights. Over the past weeks, I’ve received numerous messages from readers eager for my perspectives, with Mrs. Edith Tumwine being especially persistent. I appreciate the patience and enthusiasm from all of you. Now, I’m back with renewed vigor, and I promise to deliver my insights with the same depth as always. As ever, I welcome your thoughts, especially those that challenge my views, so that we can engage in a constructive dialogue and continue to learn and grow together.

Today’s topic is particularly close to my heart because I’ve observed what seems to be a deliberate effort to mislead people about the value of real estate investment in Uganda. Specifically, I’m concerned about a narrative that suggests investing in land is no longer as advantageous as it used to be. Instead, there seems to be a push towards promoting Unit Trusts as a preferred alternative. This shift isn’t coincidental. I strongly believe that some individuals are being paid to alter the public’s perception of real estate, steering them towards other investment vehicles.

To provide some context, Uganda has a rich history of investment clubs that prioritize real estate. The reason is simple: real estate, particularly land, has always been seen as a solid, long-term investment. It is tangible, secure, and less prone to volatility compared to financial markets. Yet, I’ve noticed that certain firms are now targeting these investment clubs, perhaps seeing an opportunity to redirect the flow of capital. They’ve recruited influencers to spread the narrative that investing in land is no longer wise. But is this truly the case?

Let’s Break Down the Myth: “Land No Longer Appreciates”

One of the most persistent myths I’ve seen lately circulating on social media platforms is the claim that land no longer appreciates. When I came across an article promoting this idea, I couldn’t help but laugh at the absurdity. In reality, land appreciation is not only steady but is often a cornerstone of wealth-building for many Ugandans. The value of land has been consistently increasing, particularly in strategic locations. In Uganda, depending on the area, the annual appreciation rate of land typically ranges between 20% and 30%. This is a conservative estimate, as in some high-demand areas, appreciation can soar to 100% or more. Of course, these higher returns are outliers, but they demonstrate the enduring potential of land as an investment. Consider any area in suburbs of greater Kampala. Ten years ago, land in these regions was affordable, and today, prices have skyrocketed as demand has outpaced supply. These areas have seen infrastructural development, increased accessibility, and rising demand from both residential and commercial sectors, all of which contribute to land appreciation. If you’re looking for evidence, just ask those who invested in these locations years back—they’ve seen firsthand how land values have evolved.

Understanding the Fundamentals: Why Land Will Always Appreciate

To understand why land remains a solid investment, one must appreciate a basic principle: land is finite. God created land once, and its supply cannot be expanded, no matter how advanced our technologies become. Yet, Uganda’s population is growing rapidly, increasing the demand for land every single day. From agriculture and housing to commercial developments, nearly every economic activity requires land as its foundation. As a result, the demand for land continues to rise, pushing its value upward over time. Additionally, land serves as an excellent hedge against inflation. When you invest in land, you are essentially safeguarding your wealth against the eroding effects of inflation. While currencies may lose value over time, the intrinsic value of land remains, making it a more stable and secure asset. Historically, land prices tend to rise even in challenging economic times, providing a buffer for investors looking for long-term security.

Planning for the Future: Land as a Long-Term Investment Strategy

When I advise on real estate investments, I always stress the importance of a long-term perspective. If you’re investing with a time horizon of 10 years or more, land remains one of the safest and most profitable ventures you can pursue. Unlike other assets that may fluctuate with market sentiment, land’s value is tied to tangible factors like location, accessibility, and demand. In the long run, these factors contribute to steady appreciation. Imagine investing in a piece of land today, knowing that in a decade or so, you’ll have the option to either sell it for a substantial profit or leverage it to generate income. At that point, you can choose to diversify into other investment opportunities like government bonds, Unit Trusts, or money markets if you’re seeking liquidity. Alternatively, you can use the proceeds to reinvest in new opportunities that align with your financial goals. Unless you’re in the lending business, where compounding interest offers its own rewards, land is the ideal way to secure and grow your capital.

Beware of Misinformation: Don’t Be Swayed by Influencers.

In today’s digital age, it’s easy to be swayed by social media influencers, many of whom may not have done thorough research before making sweeping statements. It’s crucial to remember that some of these influencers might be pushing an agenda that benefits their sponsors, rather than providing unbiased investment advice. Ignorance is costly, especially when it comes to financial decisions. As a community, we must be diligent in questioning these narratives and making informed choices. Don’t let flashy videos or trending posts convince you to abandon a time-tested investment like land.

Looking Ahead: The Truth About Rentals

Next week, I’ll address another hot topic: the pros and cons of investing in rental properties. It’s a controversial subject, with strong opinions on both sides, but I’ll provide a balanced perspective that helps you understand the opportunities and challenges involved. Until then, stay safe, stay informed, and always remember to practice gratitude—both for yourself and for the world around you.

Sabiiti10@gmail.com