You might have noticed several apartments being built in almost every neighbourhood of Kigali City, some finished, others still undergoing construction. This demonstrates Rwanda’s growing real estate sector over the past few years.

There is, however, a big question as to whether the market has embraced the culture of living in apartments or if developers are building anticipating that occupancy will happen with time.

Rwanda Development Board's (RDB) recently released annual report indicates that real estate emerged among the top investment-attracting sectors in 2023 at a tune of $350.1 million, creating 6,200 jobs.

Apartments can be categorized as those exclusively built for sale, or for rental purposes where some are fully furnished (serviced) and others are not serviced.

Diane Atete, a 29-year-old resident in Nyarugenge District, has been living in an apartment for one year and finds it perfect to enjoy her personal space and convenient to commute to work.

"Most people find it a foreign practice to rent an apartment, but it is normal. Just like I would get to rent a one or two-bedroom house, it is the same thing for an apartment. It just has to be within my means to afford my rent,” she said.

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Although there has been a mindset shift, Atete observed that many apartments remain unoccupied for relatively long periods.

This was reiterated by Justice Rwamanywa, Manager of Upper Apartments in Kicukiro District, who said that as Rwanda undergoes fast development and Kigali turns into a metropolitan city, it makes sense for businesspeople to invest in this sub-sector.

Occupancy rates low

However, the reality remains that the occupancy rate is low compared to the number of apartments coming up.

"In advanced countries, people live in apartments depending on their different levels of income. It is a way of life. I think this is where Rwanda is headed given the growing urban migration,” he said.

Rwamanywa indicated that it is currently rare to find an average-income earning family living in an apartment. At the same time, most young people work hard with a goal of building their own houses.

This, according to him, shows reluctance to embrace apartment lifestyles, adding that most clients are short-stay tenants who are mainly on business trips, vacation or attending conferences, and this tends to beseasonal.

"For instance, I can generate $2,000 per month at full capacity of four rooms, but this is generally during high season. We struggle during low season because most clients are foreigners, Rwandans stay for only a few days,” he explained.

From See Far Housing, Phoenix Apartment, and White Stone Apartments, to Rubangura Luxury Apartments, Executive Suites, and all the way to Vision City, developers are racing to build new apartment units.

Ultimate Developers Ltd (UDL), the developers of Vision City which struggled to attract clientele after the completion of their apartments and estates, says more awareness is needed to educate residents about the benefit of acquiring apartments.

According to Claudette Rubangura, UDL’s Head of Commercial Operations, the Vision City apartments have been acquired.

"It was about educating people about the benefits of community living and the available amenities that are beneficial for families in addition to the security factor,” she explained.

Rubangura noted that the price of these properties is dependent on the cost of construction materials involved, which ultimately informs how affordable they will cost.

This, she said, will gradually reduce as the manufacturing industry in Rwanda improves and the banking sector becomes more open to diversify mortgage products to ease financing.

‘Build affordable apartments’

Paul Rwigamba, Director of Projects and Property Management, Century Real Estate, doesn’t necessarily see an oversupply in the market despite increased apartment projects coming up and that the occupancy rate is relative depending on the location.

Apartments in relatively posh neighbourhoods like Nyarutarama, Kagugu, Kibagabaga and even Kacyiru cannot be occupied at the same level as those in Kanombe or Rusororo, according to him.

"Individuals have realized that it is a good investment avenue with returns slightly higher compared to other places in the region,” he noted, adding that there is an increasing number of Rwandans embracing the apartment culture, especially the middle class.

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However, he said, there are less and less affordable apartments coming to the market. "I believe the government and stakeholders should put in more effort so that the concern of affordability is addressed.”

Rwigamba suggested that anyone building and selling apartments above $300,000 is not building for an average Rwandan, but believes it makes sense to sell at anywhere between $150,000 and $300,000.

"The government can develop units that fall within the capacity of every Rwanda,” he noted.

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Simon Sondern, Co-founder and Chairman of Fortico Holdings – the parent company of Vibe Real Estate in Rwanda, is still convinced that Rwanda is a hotspot for real estate investors.

He highlighted that real estate offers attractive returns, estimating a potential 10 per cent rental return, which is a significant percentage for investors seeking income from their property.

At the same time, Sondern suggests that property values in Rwanda are likely to increase over time, offering potential capital gains in addition to rental income for investors.

That is true for investors who buy off-plan to sell once the properties are complete than those who buy for rental.

Sondern asserts that the occupancy rate streams down from three factors including the quality, design, and management of property. "If the quality and design are good, it will attract tenants or buyers, and if the management can handle tenants’ concerns, then they stay longer.”

The market has seen a number of investors in the real estate sector including Isange Estate Phase II by Imara Properties which recently handed over 12 modern comfort apartments and six villas to owners, and Bwiza Riverside Estate whose 70 per cent of homes were sold by February 2024.