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Q & A with Clive Kefford, CEO ProAfCo, developers of Jakana Heights, Uganda
October 9, 2015Article by Clare Moorhouse
Following the successful launch of a brand new collection of luxury apartments in the Ugandan capital, Kampala, Property Frontiers’ CEO, Ray Withers, interviewed Clive Kefford, CEO of ProAfCo, developer of Jakana Heights to get his views on why investing in Uganda is an exciting and lucrative opportunity right now.
Ray: So, Uganda. That is very much an emerging property market, do you think international investors are ready to explore such an opportunity?
Clive: Professional institutional investors already have a huge appetite for investment in Africa because it provides opportunities and returns that are hard to find in other parts of the world. The difficulty is sourcing investments that are packaged up with the due diligence and research required. Individual investors are also beginning to understand this and soon Africa will stop being seen as somewhere too dangerous to put their money, but rather the smart new place to invest.
Ray: Why Africa? Why now?
Clive: The biggest single change has been the huge reduction in armed conflict across the continent. There have been long periods of peace and stability in many countries in Africa and this has allowed good economic policies to be implemented and businesses to grow and operate much more easily and successfully. Previously, intermittent war has been the brake holding back development, now it has been released, Africa is catching up!
Ray: What do you think is the most common misconception people have when thinking about Africa and Uganda?
Clive: The image most people have of Africa is of war, famine and disease and this because most of the news we see is about these issues but this is very unfair. If every report from the US was filmed in an area run by drug gangs or a in a housing project with no employment, we would have a similar negative impression of the States. This is how distorted our image of Africa has become. Problems do exist in Africa but they are not the whole story, most people’s lives are largely unaffected by these issues and professional people I know in Kampala have a lifestyle that I would say is better than most developed countries.
Ray: Do you feel that attitudes towards investment in Africa are changing?
Clive: Attitudes are certainly changing as the African economies grow and they start to become more integrated at a global level. Investors are leading the way because they cannot afford to have inaccurate information and as they invest more and more, a truer picture of Africa will start to become known.
Africans do not want to be seen as victims, the emerging view from the continent is that they do not even want foreign aid and would like to see it phased out. The rapid growth in Africa has produced huge numbers of entrepreneurs who want to be treated on an equal footing as business partners. Attitudes towards Africa are changing and will continue to change as the continent become wealthier. Looking back in time, we can see the same thing has happened in many other parts of the world from the Gulf States to Ireland and Japan.
Ray: President Barak Obama visited East Africa earlier this year, how important do you feel his visit was to the outside world’s view of Africa?
Clive: Obama’s visit was a significant affirmation that the US wants to take Africa seriously as a global partner. It is particularly important within Africa, building self-confidence and encouraging business development and further growth.
Ray: How did you first get involved in Uganda?
Clive: I first went to East Africa on a Commonwealth Business Council conference in Rwanda and was amazed to see that the capital Kigali was one of the tidiest and most orderly cities I had visited. I was looking at agricultural investments on behalf of the Council, but while I was there I looked at the real estate market. I then visited Kenya and Uganda and decided that as these markets were larger, they had a more sustainable demand for real estate. Kenya had just experienced a huge growth in the real estate market and as Uganda often follows trends set in Kenya, it looked like perfect timing. Added to this, it had just discovered oil and was due to start exporting in 2018.
Ray: What made you feel that there was a residential property opportunity in the country?
Clive: Uganda’s population is growing faster than any other country in the region and this has created enormous demand for housing. At the same time the economy has been growing at over 5% per annum for 30 years, so people are getting wealthier and more people can afford to buy homes. This has created opportunities particularly in the middle and top end of the market.
Ray: Why in Kampala especially?
Clive: Kampala is the biggest city and has the most developed markets, its population is growing faster than anywhere in the country because of increasing urbanisation. It is also an extremely attractive city to live in. It is very safe, you can walk around town and everyone leaves you alone, it has an ideal climate of being in the high 20s year round, it is very green and lush and the people are extremely friendly.
Ray: What is the current state of housing in Kampala?
Clive: Interest rates have recently increased in the run up to the election and in the middle income housing market many people are waiting for the economy to return to normal next year before buying. However, for top end properties such as Jakana Heights, the money invested into the economy before elections is likely to increase purchases.
The rental market at the luxury end has been affected by the slowdown in oil exploration however this will pick up in 2018 when oil production starts and a new set of expatriate workers will need to find quality accommodation.
Ray: What or who is driving the Kampala housing market?
Clive: An increasing population, urbanisation and growth in personal incomes and wealth are driving the property market. Kampala is also seen as an alternative regional business centre after Nairobi and is preferred in some cases because it is a safer place to live. In the future, access to finance will be an important driver. It is currently difficult for many locals to be approved for mortgages, as the finance market develops and more people have access to loans, prices will increase.
Ray: Are there any geographical hotspots in terms of the city’s property market?
Clive: Like any city there are sought after areas. In Kampala these tend to be on the top of hills, such as Nakasera, Kololo and Muyenga. Price of properties can reach over a million dollars in these areas. Kampala is on Lake Victoria and there is a substantial trend of new high end development from the city centre to the Lake, particularly because this area will be much more accessible once the new Entebbe highway has been completed. The area we are developing is close to the Lake and the new highway; it is also the very top of the hill next to Muyenga which makes it ideally positioned for increasing prices as the city grows.
Ray: How do you think the city’s housing market will look by 2030?
Clive: By 2030 I expect more international and institutional buyers to be investing in the housing market to meet the demand. Currently most developers and investors are from Africa and are just now beginning to come from the Middle East. As the institutional investors from Europe and America start to play a large part, the market will begin to mature and investments will start to be seen as normal as an investment in Dubai.
Ray: How important to the country is the oil play?
Clive: Uganda has been growing rapidly without oil for 30 years and its economy outside the oil sector is likely to continue to grow. Oil production will provide a big boost to the economy but it is difficult to predict how much of the country’s GDP it will contribute. Oil prices are very volatile and it is not possible to predict the prices in 2018 when exports start. Uganda is unlikely to become dependent on oil and will continue to grow as a mixed economy, which is good news for its long term stability and wealth.
Ray: Talk us through the key appeals of your new development, Jakana Heights?
Clive: The site for Jakana Heights determined everything about the development. It is a large plot right on top of a hill overlooking Lake Victoria. It is a quiet peaceful place away from the hustle and bustle of the busy city. The site was only suitable for luxury development and we have made sure that the design, quality of build and finishing are all up to the same standard as the location.
The apartments are spaciously designed and most have great views. There is a swimming pool, saunas and steam rooms, a gym, bar and clubhouse for relaxation. There are also meeting rooms that can be hired for business and shops to provide the essentials – so that almost everything you need is catered for you on site.
Ray: What makes Jakana Heights such a stand out opportunity from other developments?
Clive: There are very few other developments in Kampala that can tick all the boxes. So many developments in Kampala are spoilt by at least one shortcoming, it might be the finishing, the size of the apartments, the design or the location. We are designing and finishing to UK standards and that is why Jakana Heights has generated so much interest. It’s also on top of one of Kampala’s highest hills giving it a very exclusive atmosphere. Sites of this quality are in short supply, Kampala is said to be built on seven hills and this is the top of one of them.
Ray: Why is the development a great investment choice?
Clive: Jakana Heights is a great investment choice because the yield on the properties is so high. Yields in Kampala on quality residential properties are generally very good at 10%, but Jakana Heights is offering much higher returns than this, suggesting that the price will rise significantly during construction. This means that you’ll make a great return whether you sell on completion or whether you hold and let it out. It is in an affluent upcoming area and will benefit from the fast new highway to the airport and all the high-end infrastructure and services coming as a result. This development will put the area on the map and result in property price increases.
Ray: Tell us about the team behind Jakana Heights?
Clive: I’ve been very fortunate to have such great people to work with. Operations Manager, Dan Jakana and I have worked together for over two years and have a superb professional relationship. He has a business masters from the US and ran his own company there for 25 years. Being a Ugandan national he also understands how business works in Uganda and hence is integral to the project, so much so that the development is even named after his family! The other key member of the team is Chief Architect Wilfred Kabbale, he is a director of the leading architectural company in Kenya and Uganda. His design work, advice and professionalism have been faultless throughout the project.
Ray: Why did you appoint Knight Frank and Grant Thornton as professional partners?
Clive: Knight Frank are the leading property consultants in Uganda and one of the best known in the world so we felt they would be able to give us the best advice available. Grant Thornton again has an international reputation and experience with similar projects and are a company that we trust.
Ray: What makes you so excited about developing in Africa / Uganda?
Clive: Developing in Uganda and Africa is enormously exciting because we have got in right at the start and there are so many great opportunities ahead. It is also a very positive atmosphere to work in because there is so much goodwill. Everyone wants to see more development in the city; the government, businesses and especially the neighbours near the site are all prepared to help. This is a big change from developing in the UK. It is bringing in capital and providing jobs which are much appreciated.
Ray: What should investors be aware of when buying in Uganda?
Clive: There are many pitfalls with the purchase of land; I have been offered land you cannot build on, land that doesn’t exist, land being sold by someone who doesn’t own it or land that has several claims to it. It is essential to be able to trust everyone that you deal with. That is the golden rule.
Ray: What steps are you taking to minimise investor’s risk?
Clive: I have ensured that I am surrounded by a highly professional team of advisors with reputations to protect. In terms of qualifications, experience and quality of work, it would be hard to find a better team anywhere in the world. As with any project management, careful planning and monitoring is essential and anticipating problems so solutions can be found in advance avoids delays or cost overruns.
Ray: What have you learnt from your past experiences in developing in emerging markets such as Bulgaria?
Clive: In Bulgaria, there were many of the same challenges, it was an emerging market and the country was going through a lot of changes. Again I found a group of highly qualified people I could trust and who understood the local systems and culture. Once I was able to cover these differences, the rest was relatively straightforward. Construction, financing and project management are the same anywhere in the world. As a result the project was delivered on budget and on time with all the buyers getting exactly what they expected.