The real estate business in Uganda appears a little chaotic, but behind it all players in the sector are pocketing millions of shillings on each parcel of land.

A survey by Daily Monitor shows that one acre of land within a 20-kilometre radius of Kampala City costs between Shs20-70 million or an average of Shs45 million - a four-fold minimum increase from a decade ago.

And the rate is discounted for those who buy huge chunks and pay upfront. But as it turns out, the value of land is never fixed. Factors such as geographical location, intended use, activity in the neighbourhood, and available services/facilities in the area where the land is located determine the price.

Other factors such as knowledge or ignorance of the seller(s) about prevailing market prices and speculation influence land pricing in substantial ways.

Land for a residential unit atop any of the myriad Kampala hills complete with a commanding view of Lake Victoria or any beautiful scenery costs more compared to low-lying areas prone to flooding. And the value of a piece of land plummets if situated say, near a cemetery or a dumpsite.

Real estate dealers say land in rural areas is a lot cheaper due to lower demand arising from limited alternative uses, poor accessibility and shortage of utility services such as piped water, sewerage, electricity and road inter-connectivity.

Because such land was customarily inherited without any 'cost', the current occupants are less enterprising and practically undervalue their land in current economic measure.

Incidentally, it is only in far-flung places that prospective buyers, in this case real estate dealers, can and do find vast amounts of land to buy.

The present real estate boom is boosted by factors such as heavy investment in land by an emerging middle class that is not satisfied with its returns on money kept in banks.

This class, with increasingly sophisticated tastes, has created a huge demand, largely for properly planned residential neighbourhoods.

But there is also the poor regulatory framework that allows speculators and others to distort the market, not to mention information gaps on the part of buyers.

The boom began in the late 1990s when pioneer real estate dealers made entry into the business of establishing organised residential neighbourhoods that appealed to the growing middle class.

Officials at the Ministry of Lands and real estate dealers say potential investors are fast turning to putting their income/savings in land due to rapid appreciation in its value overtime due to the growing demand.

Mr Anatoli Kamugisha, the managing director of Akright Property Consultants Ltd, said on average his company spends about Shs2.9 billion to buy 65 acres of land, sufficient to be mapped out into several surveyed plots that would be adequate to erect 100 high-income housing units.

The company sets aside 30 percent of the total chunk of land for constructing access roads and routing such things as water and sanitation pipes, electricity lines and drainage.

Akright's standard high-income plots are a-half an acre in size. This means that at least 91 such plots are generated from the remaining 45.5 acres of the 65 original number of acres bought. With each high-income lot going for Shs50 million, if all the 91 plots sell out, the company bags Shs4.6 billion.

But the company needs to invest Shs160 million to open up, grade and bituminise 10-metre wide access roads in the residential estate. Another Shs45 million-plus is spent on electricity.

National Water and Sewerage Corporation takes care of extending piped water if such an estate is within a 50-metre radius from the corporation's existing water lines. Otherwise, NW&SC charges Shs2, 300 per additional metre of piped water extension.

If the value of the 19.5 acres of land sacrificed for road/utilities, which on average is worth Shs895 million, is summed up with the Shs205 million expended on road construction and bringing electricity to the estate, the total of these overhead investments comes to about Shs1.1 billion.

This means that if the transactions on all the plots are tied without any flaws, the company bags a comfortable gross profit of Shs3.5 billion after deducting core expenditures, including value of land taken up by roads and utilities.

There is, however, other incremental expenditure like on registering or titling the different plots, payments to surveyors, developing architectural/building plans, legal and other consultancy fees and securing approval of development plans from the local planning authorities, supervision and landscaping.

And since there is no fixed rate of the levies on these activities, what they consume out of the gross earnings - in this case the Shs3.5 billion--could not be computed.

However, the calculations show that if financial leaks in the different land transactions are kept under control, as they ought to be, real estate dealers wind the trade with healthy financial rewards.

But Mr Kamugisha said it is the strong desire for organised environment and well planned dwellings rather than the monetary gains that keep him in the real estate business. Unfortunately, he said, the organised settlements complete with all utility services have caused a strong boost to land value that has attracted unprincipled players, pushed up competition and complicated transactions.

"People have understood our concept [of planned developments] and better land use practices," he said. "As such, other players have come in and we can no longer dictate the pace of the business."

Akright, whose flagship estate is on Kakungulu Hill midway between Kampala and Entebbe, entered the real estate business in 1999.

But none of the brokers interviewed conceded that they are making a kill in real estate business.

Mr Evans Kityo Lubwama, the managing director of Lugeye Property Consultants Ltd, said that the emergence of more companies of their kind has caused rapid appreciation in land value.

In any case, an acre of rural land in Kampala District was selling at Shs5-7 million in 1999 before the estate agents surfaced. Today, that rate has shot up four-fold.

As a result, more people - mostly young entrepreneurs and corporate employees are in this bracket - have started investing in land both as personal property and also a long-term economic asset.

"It is better for them to invest in land, which one can sell at a higher price just in the next few years instead of locking up personal savings on a fixed deposit account in a bank at very low interest rates," Mr Lubwama said.

In response, a number of financial institutions in the country are rolling out versatile mortgage arrangements that, among other things, provide clients, quick financing-for-land acquisition and housing development.

Dr Rexford Ahene, a land expert and senior technical consultant at the Lands Ministry, said most of the distortions in the land market are caused by information gaps.

"With no regulatory framework, if there isn't adequate information for the average land buyer, it results in the relatively exorbitant value, which brokers can exploit to fleece prospective buyers," he said.

Dr Ahene, who has spent most of his professional life working in the United States, said even when he has not keenly studied the real estate industry in Uganda, there are some glaring flaws that undermine legitimate trade in the sector.

"There is no national real estate licensing body yet [this sector] requires strict regulation; clearly defined state-imposed fees, and legal liabilities for brokers and standard specifications for plot sizes and road width," Dr Ahene said.

And with no government intervention, the real estate brokers determine local demand and pricing of land.

Entry into and exit from the trade is at best voluntary, explaining how impostors infiltrate the business to rip off the unsuspecting public.

Mr Denis Obbo, the spokesman for the Ministry of Lands concedes that some briefcase real estate dealers have exploited the legislative lacuna to rip off prospective land buyers, especially Ugandans in Diaspora.

As a result, he said government is drafting a new law to streamline operations in the booming real estate development trade. The proposed law would specifically set guidelines to streamline registration and regularisation of real estate developers as legitimate entities so that their trading partners such as banks can trust them.

"We are bringing up the Estates Management Law, which will formalise the activities of accessing and managing land and real estate information system to help support Uganda's development," Mr Obbo said.

To this end, the government is due to undertake an inventory of the existing real estate dealers; establish their proprietors, physical address and business particulars in order to weed out quacks that come in just to fleece the unsuspecting public.

The 1964 Town and Country Planning Act that lays the legal framework on land use planning is also being comprehensively reviewed after technocrats said many of its provisions, especially on penalties, are outmoded.