UNIVERSITY OF NAIROBI THE RELATIONSHIP BETWEEN LAND TENURE SYSTEMS AND URBAN RESIDENTIAL LAND VALUES IN KAMPALA: A CASE STUDY OF MAKINDYE DIVISION By KITULAZZI DAVID B92/81700/2015 A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT OF THE UNIVERSITY OF NAIROBI IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE AWARD OF A MASTERS DEGREE IN VALUATION AND PROPERTY MANAGEMENT NOVEMBER 2018 DECLARATION CANDIDATE'S DECLARATION I David Kitulazzi declare that this research project is my original work and it has never been submitted to any Institution of higher learning for any academic purposes. Sign: ………………………….. Date:………………………….. SUPERVISOR'S DECLARATION This research project has been written under my supervision and it is ready for submission with my approval. Sign: ……………………………… Date: ……………………………… Name: Dr. Luke Obala i DEDICATION I dedicate this piece of work to my family; my dad Mr. John Frederick Mukasa, my momma Mrs. Edith Mukasa; my sister Justine Nalwoga and my brothers Sam Luutu and Enoch Ntale Bazanye. ii ACKNOWLEDGEMENT I acknowledge several Institutions and individuals for their moral and academic assistance towards my study at the University of Nairobi. My sincere thanks go to my employer Makerere University Business School for granting me this further study opportunity as I build my carrier. In the same spirit, I sincerely appreciate IRE/BS Foundation for African Real Estate Research for their financial sponsorship for my study program. Special thanks go to my academic supervisor Dr. Luke Obala for his academic guidance which has made this piece of work a success. More thanks go to the teaching and non-teaching staff in the Department of Real Estate and Construction Management of this great University of Nairobi for their input in my studies. More thanks also go to my colleagues at Makerere University Business School (especially in the Department of Finance) for their academic support. I also acknowledge the moral and academic support from my friends and family in both Uganda and Kenya. May the good Lord bless you all. iii ABSTRACT Land holding under the land tenure systems in Kampala is a complex matter since it involves a dual ownership which allows a separation of rights to own land by the land owner and a right to use and develop the same land by a lawful or bonafide occupant with a kibanja interest. This study examined the relationship between land tenure systems and urban residential land values. With a focus on Makindye Division, the study indicated that all the land tenure systems had this dual ownership with multiple conflicting tenure rights between the land owner and occupant/tenant. The study established that there is a lot of informality in land access, ownership, sub division and developments in the Division because informal land transactions were simple and cheap as compared to the complex formal land transactions. This was observed in the selected study areas of Katuso Zone in Buziga Parish for Kabaka’s land, Kamwanyi Zone in Nsambya Central Parish for Freehold land and Central Zone in Kisugu Parish for Private Mailo. The study further indicated a general increase in urban residential land values over a period of ten years from 2006 – 2016 as a result of the factors influencing urban land values in the division that included; accessibility, social amenities, population changes, land use regulations, size of the land among others. Also findings of the study established that land tenure systems have a moderate positive significant relationship with urban residential land values given (r) = .457**, p ≤ .01 and they only contributed to 22.8% on the urban land values in Makindye Division (given adjusted R Square of .228). However, land tenure systems were insignificant in predicting urban residential land values given their probability values (p-values) higher than 0.05. The study recommended Kampala District Land Board, Buganda Land Board and Kampala Archdiocese Land Board to consider regularizing all the land informalities in Makindye Division so that a formal register is created for land access, ownership, use, developments among other land transactions in Makindye Division. iv TABLE OF CONTENTS DECLARATION ............................................................................................................................. i DEDICATION .................................................................................................................................. ii ACKNOWLEDGEMENT ...............................................................................................................iii ABSTRACT ..................................................................................................................................... iv TABLE OF CONTENTS ................................................................................................................ v LIST OF TABLES ....................................................................................................................... viii LIST OF FIGURES ....................................................................................................................... ix LIST OF ACRONYMS .................................................................................................................... x CHAPTER ONE ............................................................................................................................... 1 INTRODUCTION ............................................................................................................................ 1 1.1 Background of the Study ............................................................................................................ 1 1.2 Statement of the Problem. ........................................................................................................... 3 1.3 Study Objectives ......................................................................................................................... 4 1.3.1 Specific Objectives .................................................................................................................. 4 1.4 Research Questions ................................................................................................................... 4 1.5 Scope of the Study ...................................................................................................................... 5 1.6 Significance of the Study ............................................................................................................ 5 1.7 Definition of Key Terms ............................................................................................................. 5 CHAPTER TWO ............................................................................................................................ 6 LITERATURE REVIEW ............................................................................................................... 6 2.1 Introduction ............................................................................................................................... 6 2.2 Land Tenure Systems ................................................................................................................ 6 2.2.1 Customary Tenure .................................................................................................................. 7 2.2.2 Mailo Tenure .......................................................................................................................... 8 2.2.3 Freehold Tenure ................................................................................................................... 10 2.2.4 Leasehold Tenure ................................................................................................................. 11 2.3 Urban Land Values ................................................................................................................. 12 2.3.1 Overview of Land Values .................................................................................................... 12 2.3.2 Factors Affecting Urban Residential Land Values .............................................................. 13 2.3.3. Trends in Urban Residential Land Values .......................................................................... 15 2.3.4. Approaches to Valuation..................................................................................................... 16 2.4. Relationship between Land Tenure and Urban Residential Land Values ............................. 17 2.5. Bid Rent Theory ..................................................................................................................... 19 v 2.6. Conceptual Framework .......................................................................................................... 21 2.6.1. A Continuum in Land Tenure Rights.................................................................................. 21 2.6.2. Conceptual Model ............................................................................................................... 21 CHAPTER THREE ...................................................................................................................... 23 RESEARCH METHODOLOGY.................................................................................................. 23 3.1. Introduction ............................................................................................................................ 23 3.2. A Brief Background