Relocating businesses from residential areas: How far?

In January 2017, businesses and organisations in Kigali woke up to news that they had a three month deadline to relocate their operations from residential neighbourhoods to commercial complexes. The directive, which had a three-month compliance window, was among other things aimed at supporting commercial complexes and buildings across the city, most of whom had low occupancy affecting their ability to pay back loans. The decision was also with intent to grow the Rwandan real estate market, especially by improving its predictability for investors. Three years since the directive, a spot check by The New Times around different city neighbourhoods showed that a number of organisations continue to operate from residential neighbourhoods. These are most often international non-profit organisations. Officials of City of Kigali say that there has been significant progress in compliance with the directive. A front view of Kigali Heights, one of the commercial complexes in Kigali. Photo: Sam Ngendahimana. Augustin Rwomushana, the Director of Urban Economic Development at City of Kigali told The New Times that over 98 per cent of the identified businesses and organization have since relocated to the designated commercial and office complexes. He explained the remaining organisations and business as those with rental contractual issues or diplomatic installations which can only be dealt with through diplomatic channels. “The remaining two per cent includes those with rental contractual issues where they had made prepayments and then CoK had to allow them to continue up to the end of their contract to avoid problems between landlords and tenants. Others are diplomatic facilities that need to be dealt with through diplomatic channels,” he said. Following the directive, there were appeals by hundreds of organisations presenting reasons why they should be exempted from the move. “More of appeals were concerned with contracts, prepayments, size and the structure of the houses that needed change of usage, and others like those houses considered as their source of income hence a loss of income,” he said. Rwomushana said that they do conduct regular inspections to ensure compliance with business found not complaint closed. In the process of implementation of the directive, there were consequences to both owners of residential and commercial complexes. Residential houses which were considered more affordable, lost their revenue stream in the process. For commercial complexes, the city authorities say that it has had a positive impact raising the average occupancy levels from 50 per cent to 80 per cent. “However on the City economic development perspective as well the implementation of the city master plan, the move sought to be positive in a sense that commercial complexes occupancy rate increased significantly; for instance; before the directive, big commercial complexes like CHIC, MIC, Kigali Heights, MPeace Plaza, Career Centre etc…occupancy rate was below 50 per cent but today we are seeing a high occupancy rate at over 80 per cent on average,” he said. Rwomushana noted that while there has been impact on commercial complexes, much has to be done by commercial complex owners such as lowering rental fees, massive advertisement, marketing of their buildings and putting incentives that will make clients attracted to their buildings. Real estate stakeholders say that while there has been progress and change improving the real estate sector following the directive, much more can be done to ensure business and organisation move into commercial complexes. Paul Rwigamba, of Century Real Estate one of the largest real estate firms in the country told The New Times that the directive by the City of Kigali was a step in the right direction improving the operations in the sector. He noted that the development had gone to prove that even diplomatic establishments can be housed in commercial buildings and building owners are flexible to adjust as per client requests. This he said ought to set an example to organisations yet to comply. However, he said that there is still a gap in regards to compliance by numerous organizations who maintain operations in residential buildings while there are multiple buildings that are available to host them.

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Relocating businesses from residential areas: How far?