The proliferation of gleaming, newly-constructed buildings that stand conspicuously empty is a puzzle that challenges both casual observers and real estate professionals alike. These architectural marvels, equipped with modern glass facades and impressive amenities, paradoxically serve as monuments to commercial inactivity rather than hubs of economic vitality.
The most striking example can be found in downtown Kampala near Communications House, directly behind Christ the King Church. This substantial seven-storey structure boasts a spacious forecourt and sophisticated glass exterior, yet it remains what industry insiders describe as “a gap in the dental formula of the city.”
Since its completion nearly a decade ago, the building has maintained an eerie vacancy, broken only by a brief, few-month occupancy. Allegedly, the building’s continued emptiness stems from the owner’s unusual insistence that a single tenant must occupy all seven floors simultaneously.
The public secret
One government official recently expressed concerns about this trend. He wondered: ‘The hills of Kampala are expanding with buildings, but schools, health centres are shrinking. So, where do these people get this money from?”
He went on to answer part of his question identifying the owners as “commissioners, directors, ministers and permanent secretaries.”
The economic irrationality of these vacant buildings becomes clear when examining standard investment behaviour.
As Kenneth Kaijuka, the chief executive officer of National Housing and Construction Company Limited (NHCC) explains: “If the banks were on your case, and you have made a business case that when I build 10 floors, I will be collecting Shs1m per month, and, therefore, in 12 months, I will have Shs12m, and I will pay you back in 12 years, the moment you do not have that cash flow, it threatens the building. You would have foreclosures running every day.”
The absence of such foreclosures indicates what Kaijuka terms “patient capital”, money not subject to conventional banking pressures.
“People could have easy and quick money that is supporting that kind of idle capital,” he asserts, adding that “the fact that some developers are able to sustain empty buildings speaks a lot about the source of funding.”
The half-empty tower syndrome
The vacancy issue extends beyond completely empty buildings to include what industry professionals call “half-empty towers.” Throughout Kampala, numerous commercial and office buildings show vibrant activity on their ground and first few floors, but demonstrate progressively lower occupancy rates on higher levels. From an economic perspective, this indicates that these buildings are not generating projected returns, raising questions about why developers constructed floors they knew would remain unprofitable. Michael Mwizerwa, the head of research and development at Broll Uganda, suggests that one explanation for the anomaly is that we have a lot of money that is put into real estate.
‘The investor’s goal is to just build. What comes after is not a concern. Business is not their first goal, but rather, investing in something.”
Systemic planning failures
Kaijuka identifies poor planning as a key factor driving tenants away from city centres.
“Poor planning is pushing prospective tenants out of town into former residential areas such as Ministers’ Village in Ntinda because of parking problems in the city centre. Someone cannot rotate around the building looking for parking every day. They will go out of town where they can find parking without a hustle.”
This exodus explains why many former residential areas are transforming into office spaces, leaving central business district buildings increasingly vacant. Property expert Cissy Namaganda emphasises the stark contrast between market needs and developer priorities.
“The fact that we still build 10-floor buildings that end up half empty in a town that has a massive parking problem says a lot. Any expert would tell you that having a parking space in the upper most floors would be a better deal with little to no maintenance,” she notes.
The “me-search” phenomenon
Mwizerwa identifies a critical methodological flaw in Uganda’s property investment culture, which he labels “me-search” versus legitimate market research.
“They do a thing that I like to call me-search. They have seen how much money is made from commercial buildings in town and that is enough information for them. And so they resolve ‘since I have the money to build seven storeys in the heart of the city, that is what I will do.'”
This approach completely bypasses essential research into “what kind of spot is the best for what, what are the current needs of the prospective tenants, how high shoppers are willing to climb to get to a shop, among others. It is all about what the individual wants, not what the industry wants. That is me-search,” Mwizerwa explains.
Cultural barriers and market opportunities
The resistance to incorporating apartments in commercial buildings represents another significant market oversight, rooted in cultural perceptions. Mwizerwa points to Capital Shoppers’ successful integration of apartments above their supermarkets in Nakawa and Ntinda as evidence of this missed potential.
“There are very few properties downtown that have apartments upstairs, yet they have a tenancy problem. I was shocked when I found out that Capital Shoppers has apartments at the top. Both the one of Nakawa and the one of Ntinda. You would not even know it looking from outside. And they are full. And they are affordable. They will never lack tenants.”
This innovation challenges what Mwizerwa identifies as deeply ingrained cultural attitudes: “There is this Ugandan thing where living in the city centre has been frowned upon for decades. Living in the city centre has been relegated to foreigners. It is elitist. They want to drive you to town rather than live in it.”
He suggests practical benefits could overcome these cultural barriers: “Fuel is not cheap in this town and living in town would eliminate the high transport fares, at least for unmarried young Ugandans.”
Systemic ignorance
The industry suffers from a fundamental disregard for professional expertise. Mwizerwa contrasts Ugandan investors with their international counterparts.
“Investors, typically, non-Ugandan investors, will seek out experts to do research for them before they invest. Because they are coming from a point of total ignorance, they do not know the country well and they rightly seek out experts to guide them. The challenge is marketing to Ugandan investors because we all think we know what we are doing. We think we know Kampala. Ugandans do not want to do research because they do not think they need it. Yet they are ignorant.”
This professional neglect manifests in multiple ways, including disregard for basic space planning according to asset class requirements.
“The other sign that many investors do not do research is the disregard of space requirements in the different asset classes. An arcade has different space requirements from an office block. How big the rooms are and how they are laid out all comes down to data. What is the size of the corridor in which people walk around between different shops? Where are you positioning your bathrooms? What is the expected number of users of the building? If you get any of this wrong, chances are you will not get tenants at the price you set. The result, possible foreclosure.”
Legal complications
The foreclosure process itself reveals another layer of industry misunderstanding. Mwizerwa clarifies a critical legal nuance.
“The bank or the creditor has no right to sell your property. It may be in their hands temporarily, but you remain the owner by law.”
He attributes unnecessary property losses to investor ignorance and poor advisory.
“But people are ignorant. Combine ignorance and refusal to consult, and you have all these problems. Because if a bank comes to you and says, ‘I am going to take your property,’ you have the right to say ‘no’. You have the right to negotiate new payment terms. And if those fail, then you have to go to court and the court decides the final move. But this business where you just wake up one morning, credit officer calls you and says ‘we are taking the building’, that is not proper.”
This knowledge gap, Mwizerwa suggests, benefits legal professionals disproportionately.
“Again, this is because people don’t want to consult with professionals. They talk to the wrong people. I have no beef with lawyers as a profession, but many don’t know property law. But the client trusts the lawyer to sort out a problem that would not be there with the right professional. This loophole is the reason property is such a lucrative business for a certain group.”
The cumulative impact
The ghost towers of Kampala thus represent more than mere commercial failures; they symbolize a market fundamentally distorted by illicit financial flows. As Mwizerwa, says, the repercussions of normal market circumstances would lead to “very low to no return on investment, or worse, failure to pay a bank loan. Foreclosures would come crashing in like a tsunami which happens a lot too.”
Yet the continued construction of increasingly tall buildings in an industry known to struggle with filling existing space remains the ultimate anomaly.