Investing
What rental yield can you expect from commercial property in Kampala?
Yield is the number that turns a building into an investment. How to calculate it, and what counts as good in today’s market.
When investors compare buildings, they rarely talk about price alone. They talk about yield, the annual rent as a percentage of what the property costs. It is the quickest way to judge whether a building earns its keep.
How to calculate it
Gross yield is the annual rent divided by the purchase price, times one hundred. A property costing 400 million shillings that rents for 40 million a year yields 10% gross. Net yield goes further, subtracting service charge, management, repairs and vacancy before dividing, and it is the figure that actually predicts what lands in your account.
- Prime CBD retail and offices often trade at lower yields because buyers pay for security of income.
- Suburban offices and lockups can offer higher yields to compensate for slightly higher risk.
- Warehousing and industrial space has firmed up as e-commerce and distribution demand grows.
A high headline yield is not automatically a good deal, it can signal a hard-to-let building or a short lease. Weigh yield against the quality of the tenant and the length of the lease. Use the rent and price data on Qubicle listings to run the numbers before you invest.
From the marketplace
