An assessment of the effect of speculative development on investor performance. (case study Naguru suburb, Kampala city)

Abstract

This research assessedthe effectofspeculativedevelopment on investor performance with a case study of Naguru suburb, Kampala City. The study involved looking at different aspects such as the factors investors consider before embarking ontospeculative developments, the effect of these developments on demand, supply and rents in Naguru suburb as well as the effect of embarking onto these developments to investor. All this information combined helped to reach a conclusion on how speculative developmentsaffect investor performance. A quantitative approach was used to carry out this research with questionnaires being the only form of data collection. Data was contracted from land lords, property managers, investors and property owners of Naguru suburb. A quantitative data analysis was then employed where both descriptive and inferential statistics were used to analyze the findings of the research. The research found that the factors considered by investors before embarking onto these developments include; potential return on investments with 48% of therespondents strongly agreeing to ti being the most important factor,current market trends of an area where 41% of the respondents agreed to ti being among the prominent factors considered and location, financial arrangements, type orcomplexity ofthe construction, time span, among others which were gotten from secondary data as shown ni the literature review. It was also discovered that speculative developments greatly affect supply by increasing it as 57% of the respondents noticed ti inNauru since many investors decide to construct in aspecificarea around asimilar time frame due to the current favorable market conditions. 64% of the respondents also agreed to an increase ni rents in the areaand 55% to asignificant impacton demand of the housing. On the end of investors, the research suggested that the decision to embark onto speculative developments has both elements of improving investors' performance as well as negatively affecting .ti Much as there's an element of financial gain which was backed by 83% of the respondents, there is equallya significantelement of financial risk and loss as wellas stress to the investors which 68% and 865 of the respondents agreed to respectively. It is therefore recommended that investors adopt the presale technique to mitigate the possibility of financial loss as well use of data analytics to better track their performance and make informed decisions.