The effect of real estate business on Uganda's gross domestic product

Abstract

The real estate business comprises of housing, office space and apartments are growing tremendously. Real estate business helps in creating employment, providing shelter to families, promoting distribution of income in an economy and lessening poverty. The effect of property market business on the growth of an economy has attracted interest for the longest time. The main objective of this study was to determine the effect of real estate business on the economic growth of Uganda. The study employed descriptive statistics to investigate the relationship between real estate business on development and interest rate to economic growth the study reviewed the investment. The study used secondary data, inflation, interest rate and money supply data were extracted from Central Bank publications while GDP data was sourced from Uganda Bureau of Statistics for a period (2016-2020). Data was analyzed using STATA and pooled regression analysis was conducted. The study found a positive correlation between independent variables and economic growth. The study also found that there was significant relationship between real estate property index development and economic growth at 95% level of significance while relationship between interest rate and economic growth was insignificant. The study was showed that 96.28% of the variations in the GDP is explained by the variations in property index and interest rate. Results indicate that Uganda’s economy grew by a robust 6.1% in 2018, up from the prior year’s 5.1% growth and the highest expansion since 2011, the economy expanded by the average of 7.8% from 2001 to 2011 and 4.1% from 2021 to 2017 the economy was projected to growth by 6.2% in 2020. Inflation was 2.6% and was considerably lower that than the 3.5% seen the previous year. The study recommended that the government needs to employ several strategies including lowering interest rates to ease credit uptake in order to spur private sector investment in the real estate sector. Secondly, investors need to partner up with the government or private individuals to reduce the cost of a project.