There is a need to devise smart solutions that can enable urban low-income earners to invest in real estate as a way of making the urban cities inclusive for all segments, smart solutions developers have suggested.
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The real estate sector is a crucial sector and a potential driver of future economic growth. The sector contributed Rwf647 billion to the national GDP in 2019.
During the Africa Smart City Investment Summit in Kigali, under the theme "Leadership for smart cities solutions: Investing in inclusive cities", developers proposed various ways low-income earners can invest in real estate in the cities.
In Kigali, according to data from The National Institute of Statistics, around 54 per cent of inhabitants are low-income people who earn between $38.0 and $225 per month.
Around 13 per cent of them earn less than $38 per month.
The middle-income group represents 21 per cent of inhabitants whose monthly incomes range between $225 and $678.
Generally, the housing market has largely targeted high-income households, which represent less than 12 per cent of all urban dwellers.
"Many urban dwellers have been discouraged saying that with the low income or low salary, they can’t buy land or a house. We have developed a smart solution under Shora Realty company that could help low-income earners invest in real estate to buy and sell land plots or houses through crowd-funding,” Jean Francois Kaberuka, the co-founder of RDB-registered Shora Realty company told The New Times.
The tech-enabled crowd-funding solution will be implemented by raising money from a large number of people including low-income earners who each can contribute a relatively small amount to be invested in real estate.
User-friendly real estate crowdfunding platform will allow low-income earners to pool their money online with other investors to purchase the property (or a share of the property) as a group.
The solution showcased during the Summit, at Kigali Convention Centre (KCC), will connect people on a platform to join efforts where each can invest $10 (over Rwf10,000) as a minimum share in the real estate business.
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"Each person can buy a share worth $10 up to shares worth $1,000 maximum, and together they can buy a land or a house. The shareholders can agree with one another to sell the property after its value has increased and then share the profit or prefer to make use of it for different purposes as a business. They can also build affordable houses on the land once they have raised enough money,” Kaberuka said.
Call for investment in smart city solutions
Among the notable opportunities in the real estate and construction sector is the implementation of the Kigali City Master plan.
Rwanda has also earmarked six secondary cities (Rusizi, Rubavu, Musanze, Huye, Muhanga, Nyagatare) which present enormous opportunities especially; in real estate and infrastructure development.
The country needs 5.5 million dwelling units (150,000 dwelling units to be constructed annually) to cater for 22 million people by 2050.
It is in this context that officials have urged investors to implement smart solutions such as real estate for the growing population in urban areas.
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"There are different solutions that need to be scaled up and, therefore, we brought together investors, financial institutions, and others to the summit to meet those who developed smart solutions,” said Pudence Rubingisa, the City of Kigali Mayor.
Some of the solutions are sustainable energy supply, affordable housing, construction technology and building materials, transportation and access to urban services, beating traffic and pollution, and green building.
The solutions also include sustainable water resources management, waste reduction, reuse and recycling, e-government, citizen participation, services, innovation and jobs of the future, disaster preparedness and resilience, smart urban agriculture and food systems, and nature-based solutions among others.
‘Equity investment’
Junior Kanamugire, a Deal Flow Manager at Katapult Africa investment vehicle for startups, said that they are preparing to invest in smart solutions through equity investment apart from agriculture and environment sectors.
Equity investment is buying shares directly from companies or other individual investors with the expectation of earning dividends or reselling the same when it is profitable.
"We help such startups by buying shares as well as building capacity for them,” he said.