People have rushed into the real estate business in the oil-rich Hoima district hoping to reap big from workers attracted by the oil and gas sector and other offshoot industries.
As a result, there has been an increase in the prices of construction materials. A mini survey by The Albertine Journal indicates that construction materials prices have risen, some by 50% for the past three years, higher than they were in October 2018.
The rise in prices has been attributed to the increased demand due to construction and real estate development since 2019 when oil and gas sector activities peaked again after a lull to reach the Final Investment Decision. This has seen billions of shillings spent in the sector, according to observers.
A tonne (trip) of sand increased to sh160,000 from sh100,000, aggregate stones increased to sh190,000 from sh130,000, while burnt clay bricks increased to sh350,000 for a lorry carrying 2,000 pieces, up from sh180,000 in the last four years.
For the burnt bricks this means a jump from sh80 a piece to sh150. A lorry of murram goes for sh140,000 from sh90,000 and these costs are exclusive of transportation costs.
The prices of timber have also shot up. The prices of softwood lumber prices and poles for roofing, post-frame construction and vertical and horizontal support, increased from sh6,000 to sh8,000 and sh4,000 to sh5,000 per item.
However, in contrast some of these prices are lower than what they are in other parts of the country especially Kampala.
In Kampala, the timber, on average costs between sh13,000 to sh14,000, an Elf Lorry load of pit sand ranges from sh190,000 and sh200,000 and the same amount of Lake sand costs between sh220,000 and sh240,000.
The timber in Kampala goes for sh18,000 and sh20,000 a piece, while burnt clay bricks range from sh350 to sh450 a piece.
The ramped-up local construction sector in the oil region is not the only reason timber prices are up. The demand from South Sudan is also to blame.
The demand for construction materials has been due to a boom in demand caused by demand for accommodation to house workers in the oil industry.
There has been increased gentrification in Hoima City and the expansion of the hotel Business with guest houses, lodges, residential houses, fuel stations, schools, private health facilities, road projects and shopping arcades being constructed.
As the oil industry activities increase mid this year, more money will be poured into local construction and this will make some people, such as hardware operators, make money from the construction sector.
However, on the other hand prices have affected people who had plans of building their own houses and making other developments.
The cost of building a house now is beyond many dwellers’ means. Some had to halt plans to complete their buildings because the prices of construction materials are high as they wait to save money. Many are worried after sensing that prices may increase further.
Stakeholders have meanwhile called on the Uganda National Bureau of Standards (UNBS) to ensure standards are adhered to.
This will not only help avoid unnecessary accidents, but will also enable the local people to overcome unfair competition from elsewhere.
Jackson Kiiza, the sector observer in Hoima City, said prices for construction materials are likely to increase due to demand since the oil industry is expected to reach its peak. They will need to complete their housing projects.
What is perplexing is most poor people’s income levels remained the same yet construction materials costs rose.
Accommodation facilities are not the only ones causing the price hike of construction materials. There are many oil projects that are ongoing and yet to start that are likely to cause more demand, which will cause the price to rise further.
There is also the ongoing construction for one of the stadiums in Hoima City to host Africa Cup of Nations (AFCON) that will be hosted by Uganda, Kenya and Tanzania from June to July in 2027, which is causing more demand for construction materials.
The construction materials needed in large quantities include cement or lime for soil stabilisation, murram, crushed stones, sand and clay, among others.
Rapid urbanisation will be behind a huge demand for housing to catapults demand for commercial spaces.
Uganda Bureau of Statistics (UBOS) says urban population will grow from 4.4 million in 2020 to 6.4 million by 2025, which will exert more pressure on existing stock.
In Hoima paved roads, increased access to water and electricity is making it easier for people to build in urban areas which has also seen a metamorphosis of new urban centres.
The UBOS Input Price Index (CIPI), revealed a 1.2% annual increase in construction sector inflation for the year ending September 2024.
This marks a slight decrease from August’s rate of 1.5%. Building costs increased by 2.2% in September, compared to 2.0% in August.
Civil engineering materials experienced a slight increase of .0%, down from 1.2% the previous month. Specialised construction activities saw a modest price rise of 0.4%, compared to August’s 1.1%.
