Commercial activity related to the recent signing of key agreements related to the 1,445km East African Crude Oil Pipeline Project (EACOP) and a surge in procurement budgets from oil explorers have raised hopes of a recovery in the country’s hit real estate industry Coronavirus pandemic.
While the procurement budgets of the oil exploration companies operating in Uganda fell between 2017 and 2020, an increase in spending in the first three months of this year indicates strong real opportunities for recovery in the real estate sector.
The industry has struggled with low occupancy rates, widespread rent defaults and bank foreclosures since the outbreak of the pandemic last year.
Figures from the Petroleum Authority of Uganda (PAU) show that the total value of actors $ 60 million in procurement contracts in the oil and gas industry In 2017, it dropped to $ 43 million in 2018.
The total value of industrial contracts declined to $ 21 million in 20 in 19, a pattern attributable to longer days that began with the announcement the Final Investment Decision (FID) for Uganda’s commercial oil exploration program, as well as lengthy income tax disputes between the Uganda Revenue Authority and international oil companies amid falling global crude oil prices.
International crude oil prices fell averaging $ 65 each in 2015 and 2016 Barrels to historic lows of less than $ 40 a barrel. This resulted in cuts in industrial spending and the suspension of new projects.
The total value of industrial contracts awarded in 2020 was $ 13 million. This is a modest number, due to the harsh effects of the Covid-19 pandemic, which pushed US crude oil prices to unprecedented negative levels and the total value of oil and gas industry orders placed in the first quarter of 2021 rose to 300 Million US dollars, while the value of the contracts expected after the announcement of the FID planned for late June is estimated at 2.8 billion US dollars to the regulator of the oil and gas industry.
Important Project implementation agreements, including the tariff and transport agreement as well as the route transition agreement between Uganda and Tanzania and the EACOP Company, were signed on April 11, 2021 in the Entebbe State House by President Yoweri Museveni from Uganda and President Samia Suluhu from Tanzania.
In addition to the US $ 4.5 billion EACOP, which connects the Hoima district in Uganda and the Tanga port in Tanzania, the others are critical In the planned projects in Uganda’s commercial oil production program, the oil refinery and support for oil field drilling rigs. Major international oil exploration companies that have invested in Uganda include Total E & P from France and China National Offshore Oil Corporation, while the small companies include Armor Energy from Australia and Oranto Petroleum from Nigeria.
The however, latest PAU data shows the number of businesses the local housing units occupied by actors in the oil and gas industry rose from 40 last year to 200 by the end of March 2021. a sign of renewed demand for housing, business opportunities for homeowners and a better return on investment.
Details of average monthly rental fees charged against oil and gas exploration companies, choice of housing designs, and preferred locations may not be established at press time.
“Property prices have remained stable during the pandemic, although some distressed property owners, ie e faced huge bank debts, had their selling prices discounted quite heavily to pay off their loans. But I don’t know much about clients in the oil and gas industry, ”noted Timothy Muyingo, a Kampala real estate agent.