Property devt boom a vote of confidence in Rwanda's economy

Two mega commercial complexes opened their doors to the public and businesses last week in different city suburbs. The development comes less than six months since the commissioning of the Kigali Convention Centre and Kigali Marriott Hotel. With lack of quality commercial and office space in the city, these multimillion-dollar properties, besides changing Kigali skyline, could help boost the local commercial housing market and economy, in general. Sector analysts also say the two huge commercial complexes are a reflection of what happens when local and foreign investors form partnerships. Liliane Mupende, the chief executive officer Ultimate Developers Limited, says the recently inaugurated mega commercial buildings highlight the investment opportunities and synergies in the City Master Plan, and the overall country’s vision that the private sector must continue to explore. Mupende says the rate at which the city is urbanising requires timely intervention and more investments in the housing facilities to match the demand. Government targets 35 per cent rate of urbanisation by 2020 from the current 6.7 per cent. Charles Haba, the MD Century Real Estate, says these latest additions will help cater for the low supply of quality commercial spaces required. Haba notes that commercial buildings, like Kigali Heights and Champion Investment Corporation Complex (CHIC), have set the pace in terms of quality and building standards in the local property market. “The two properties will inspire change for areas, like Quartier Matheus, Quartier Commercial and other places earmarked for commercial building development in the Kigali master plan,” says Haba. Both commercial buildings provide among other things office space, restaurants, shopping malls, ample parking, and recreational centres, especially for children. Boosting investor confidence The continued inflow of big foreign direct investment (FDI) in the real estate development will help make the sector more competitive and attract more investors into the country as the local economy grows. “When foreign investors are willing to inject equity into the country through partnerships, it’s a vote of confidence in Rwanda’s business reforms, which seek to improve further the business environment,” Baptista Twiringiyimana, a Kigali-based urban planner, told Business Times. Rwanda ranks highly in the annual World Bank doing business reports as one of the top destinations to do business on the continent and globally. The country was ranked second-best in Africa in the ease of doing business by World Bank doing business report 2016. According to experts, projects like the, $40 million (about Rwf23 billion) Kigali Heights and CHIC mega complexes are “a reflection of attractiveness of investment climate in the country”. The Rwanda Development Board (RDB) says there are still many more untapped investment opportunities in the real estate and construction sectors, including building of commercial complexes and shopping areas, entertainment centres, as well as making of different materials required by the industry, like bricks, tiles and furniture. However, Stephen Ruzibiza, the chief executive officer Private Sector Federation (PSF), says such opportunities require strong public-private sector partnerships if they to be exploited maximally. He also urges developers and other industry players to adopt innovative and cost-effective technologies to deliver affordable and quality housing projects. Anitha Umuranga, another real estate expert, says it is important for sector players to form partnerships that will help in resource mobilisation, among others. “Forming joint ventures with firms that have better expertise and more financial resources will make it possible for developers to build quality and affordable structures to serve the current demand,” according to Umuranga. This will also trigger growth in the housing sector, make the real estate business lucrative and attract more investments, she adds. In an earlier interview with The New Times, Dr Phil Goodwin, the chairperson of Fusion Group, hailed the investment climate government has put in place and pledged more investments that will spur Rwanda’s economic growth. “We are investing in this country because of its economic stability, the confidence we have in it and the prevailing security. There is no doubt that Rwanda is one of the places where great things are happing on the continent.” The CHIC complex in downtown Kigali, one of the new commercial buildings, that were inaugurated last week. Private sector efforts lauded, more jobs created The private sector has been applauded for supporting Rwanda’s call for self-reliance by pooling resources for such huge projects, without relying on foreign lenders. Analysts say that if more private sector players adopt a similar approach to resource mobilisation, the country could outpace its growth targets going forward. However, business community needs to partner with the public sector to strengthen the country’s push towards a middle-income status. Meanwhile, more than 3,000 people are expected to get direct and indirect employment opportunities at the two recently launched commercial complexes, translating into increased income for households. At least 1,500 people could get jobs in businesses that will occupy the $30 million CHIC building, Mohammed Mpazimaka, the secretary general of CHIC Corporation, says. This is in addition to the 2,000 employment opportunities at Kigali Heights. Government targets to create more than 200,000 off-farm jobs annually in the medium-term under the second Economic Development and Poverty Reduction Strategy (EDPRS II) and Vision 2020. Getting tenants won’t be a problem One of the challenges developers face is lack of tenants. In fact, most mega commercial buildings are said to have many empty spaces, especially the upper floors of these buildings. Business owners attribute this to the high rental fees that ‘chase’ away would be tenants, a reason why many organisations and individual businesses use residential houses in suburbs as office space, while some commercial buildings in the city are doubling roles as retail stores and offices. Some developers even quote rent in US dollars, making space expensive for small-and-medium ventures. However, Haba says there is growing demand for quality office and commercial space. Mupende says the rate at which the city is urbanising requires these kinds of investments to create jobs and facilities, like offices. ( Net) “This (growing demand) is what is fueling development of mega commercial structures because investors are confident they will recoup money put in the projects.” Currently, rent office or commercial space ranges from $16 -$18 per square metre. CHIC complex Located outside the Central Business District (CBD) in Nyarugenge District, CHIC, with 1,500 commercial and office rooms, is a result of partnership between private sector players. The complex is expected to cost $30 million (about Rwf22.2 billion) after completion. Kigali Heights The $40 million (about Rwf32 billion) complex seats on 11,000-square metre piece of land at the former post office in Kacyiru. The dual structure, with nine-storey and seven-storey buildings, was developed by Kigali Heights, and funded by Fusion Capital, a Kenyan equity firm. At least 1,500 people will be able to get business space at CHIC complex; for Kigali Heights, it has an office space of about 12,750 square metres, while there are 5,250square metres of prime retail space, a parking area for 300 cars. business@newtimes.co.rw

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Property devt boom a vote of confidence in Rwanda's economy