Warehouse leasing declines in Uganda

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Uganda Revenue Authority (URA) limited some products from custom warehousing at the port of entry which forced a drop in warehouse leasing activity during the second half of 2019.

This is according to a Knight Frank report which pointed out that impact by statutory directives saw varied activity in the retail segment of real estate, during the period URA issued a list of goods that would not be eligible for customs warehousing at the point of entry.

According to the report, the net effect of this meant that traders would have to import goods, pay taxes immediately and then transport them to the final destination.

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“The change in operations will no longer allow traders to keep certain items in bonded warehouses,” the report reads in part.

Some of the lists of goods included building materials, sugar, wines and spirits, motor vehicle tyres and tubes, motor vehicles older than 14 years, among others.

Data from Uganda Revenue Authority shows that due to a ban on cars older than 15 years in, used car imports declined by 12.8 per cent in the year ended 2019.

In 2019, only 42,681 units were imported compared to 48,966 units in 2018.

The move will have a direct influence on the warehousing sector, especially bonded warehouses because the items mentioned will become obsolete, the report noted.
However, malls managed by Knight Frank have seen increased activity with expansions and debut of new entrants.

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The real estate sector in units in prime residential units in areas of Kololo, Nakasero and Naguru, also saw an increase in the supply of apartment units. This, however, led to a 9 per cent year-on-year decline in occupancy rates which forced some landlords to give discounts in rents.

The reports also note that as more apartments were constructed, fewer people and companies are able to afford them.

According to the report, prime office space (Grade A and B+) also registered a 3 per cent year-on-year decline in occupancy rates. With the decline being attributed to reduced demand by large space occupiers particularly multi-nationals and large corporates.

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