Kampala’s short-term rental market has evolved from a niche Airbnb business into one of Uganda’s fastest-growing real estate investment segments with nearly 3,500 active listings now generating an average of Shs24 million annually per property, according to a new market report by Knight Frank Uganda.
The report stated that the city’s furnished apartment market is no longer driven by casual landlords but by increasingly professional operators targeting business travellers, diplomats, NGO workers and regional corporate visitors.
Kampala’s short-term rental market is one of East Africa’s most commercially significant and fastest-evolving hospitality subsectors, the report found.
“It is not a speculative frontier; it is an established, revenue-generating market with a structurally resilient demand base,” the report reads in part.
As of December 2025, Kampala had 3,478 active Airbnb listings, representing a 56.7% year-on-year increase, while the average listing earned US$6,333 (approximately Shs24 million) annually. Occupancy averaged 44%, with a median nightly rate of US$39.
This growth, the report adds, is being fuelled by property owners abandoning traditional long-term leases in favour of furnished apartments that promise higher returns and greater flexibility.
Knight Frank says the trend is likely to accelerate as more than 1,000 new apartment units are completed in Kampala’s prime neighbourhoods over the next two years, many of which are expected to enter the short-stay market.
Demand extends beyond tourism
Unlike global Airbnb markets that rely heavily on holidaymakers, Kampala’s market is underpinned by institutional demand.
The report identifies development agencies, diplomatic missions, multinational companies, diaspora Ugandans and regional business travellers as the sector’s primary customers, making occupancy less vulnerable to tourism cycles.
“Kampala functions as a primary logistics, medical and business hub for the Great Lakes region, citing growing visitor numbers from the Democratic Republic of Congo, South Sudan, Rwanda and Kenya”. The report notes.
However, Knight Frank says operators in upscale areas should prepare for changing market dynamics after reduced international donor funding slowed demand from Western expatriates.
“The market has witnessed a slowdown in Western expatriate demand due to global redeployments and USAID funding contractions,” the report says.
Bugolobi overtakes Kololo as the smarter investment
Perhaps the report’s strongest investment takeaway is that Kampala’s traditional luxury suburbs are no longer the obvious choice for investors.
While Kololo, Nakasero and Naguru continue to command the city’s highest nightly rates, Knight Frank says neighbourhoods such as Bugolobi, Bukoto, Mbuya and Entebbe now offer the best balance between acquisition cost, occupancy and long-term returns.
“The Kampala STR market rewards execution discipline more than asset quality alone. A well-managed unit in Kyanja will consistently outperform a poorly managed unit in Kololo.” the report says
Knight Frank argues that success in Kampala’s short-term rental sector increasingly depends on hospitality standards rather than property ownership.
Reliable electricity, backup water, fibre internet, professional photography, responsive guest communication and dynamic pricing have become essential rather than optional, as competition intensifies across the city.
The firm also expects tighter regulation of the industry, urging operators to formalise their businesses before enforcement increases.
“Kampala’s short-term rental market has passed the speculative phase, It is now an established, revenue-generating sector with defined demand drivers, measurable performance metrics and a clear trajectory toward greater professionalisation and formalisation.” Knight Frank concludes
