Over the weekend President Yoweri Museveni commissioned the
new head office of the Uganda Revenue Authority, an imposing structure that is
set to dominate the Nakawa skyline for some time to come.
Congratulations are in order to URA for the construction of
such an aesthetically appealing building, which I hope wills set the pace for
other developments not only in the area but in Kampala and even Uganda as a
whole.
I know the pride that comes with having completed such a
massive build for the initiators and implementors.
The new 22-story structure has allowed the tax man to fold
back all his offices from around the city back to the head office, a move they
estimate will save them sh7b annually. Using simple math the sh140b will pay
for itself in 20 years.
The move is seen as precursor to a government move to build
a ministerial compound in Bwebajja, where all ministries will be relocated
sometime in the future. I have seen comments that such actions are evidence
that the government is thinking strategically and saving the tax payers’ money.
I am not so sure about that.
I will assume that the URA put out that savings figure for publicity purposes. But they must know that utility bills, maintaining, and depreciation charges on that building will cost them a lot more than the assumed rent they have “saved”...
The real benefit is the convenience to the administration of
URA of having all its departments under one roof. It helps that they have built
up their E-tax system and therefore some, not all tax payers, need not have a
face to face interaction with URAs staff, but I would not relish the journey to
Nakawa, through the hustle and bustle of Kampala to do my tax business.
And god help us if their systems go down, the traffic on
Jinja road will be horrendous.
That aside with a single stroke URA has reordered the whole
commercial property market. The Nakawa building is more than 20,000 square meters of commercial space. Crested Towers URA’s former landlord is already in the
market for 5000 sq meters that have fallen vacant as will so many landlords
now.
In an ideal market this single move may have collapsed the
property market in and around Kampala, putting property developers out of
business and setting dozens of real estate professionals out on the street.
It has not happened yet. The peculiarity of our market and
the promise of continued economic growth may help us smooth over this major
shock to the system.
"The point is that property developers are going to have to think twice about investing in Kampala as returns are not certain. Already there is reported glut of rentable space in the city and that was before URA relocated its tent to Nakawa...
Government’s plans for Bwebajja can only heighten anxiety in
the industry.
Government’s plan to build its own building is having the
detrimental effect of crowding out the private sector.
The plan for government and its departments to house
themselves will have numerous unintended consequences, not least of which will
nip in the bud the beginnings of a local property development industry, that
over the last three decades has helped us dent the huge deficit in commercial
and residential property sector.
As shown above the economic sense of government housing
itself is tenuous at best, which makes cutting off local property developers at
the knees even more questionable.
We all want the best for our country. Government saving
money on their procurements would be a welcome development.
But there are always two sides to the coin.
In this case it could mean a slowdown in the progress of
local developers, who employ thousands on construction sites, property managers
and an ecosystem of suppliers and service providers.
As they say not everything that glitters is gold.
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