Housing shortage looms amidst a rapidly growing population

The imminent shortage of commercial and residential accommodation in Kigali is set to exacerbate prices as the surging population drives housing demand. Whilst it is still possible to secure a small house for rent in Kigali City at Rwf20, 000 per month, one must be willing to cope with the remoteness and inaccessibility that surrounds such a home. A mini survey carried out around Kigali by Business Times shows that an average two bedroom house with a living room, kitchen, toilet plus a store ranges from Rwf80,to Rwf100,000 per month. While residential rent for a fully furnished bungalow in posh places like Nyarutarama, Gacuriro or Kibagabaga hover around 300,000 and Rwf500, 000, this is in the region of Rwf200, 000 in other parts of the city. Statistics show that residential rent has increased more than two fold since 2008. Analysts attributed the trend to the rise in land costs occasioned by the surging population which is exerting pressure on the country’s small land size. Rwanda’s population is projected at 11 million people and it is growing at a skyrocketing pace of 2.79, according to official statistics. Kigali the capital city harbours a population of approximately one million people squeezed on 731 square kilometers. However, only half of Kigali’s 731 square kilometers is considered to be habitable while the rest is covered by steep slopes, wetlands and forests. Innocent Kayitare, a graduate and resident of Remera, bemoaned the sudden invoice that his landlord threw at his door one morning. “I shifted from house to house last year because the landlords were constantly increasing the rent. Right now am resigned to staying in a small house with two other people so that we can share the rent expenses,” he said. “The landlords use us as their shields whenever things go up on the market. When the prices of sugar or fuel increases, the landlords also increase the rent, yet we also have to buy that same sugar.” Industry observers say the rise is part of the general surge in the prices of goods and services including construction materials, which pushed the country’s inflation rate to 7.14 per cent in July up from 0.23 per cent in December last year. According to the Chairman of Real Estates Association of Rwanda, Charles Haba, construction business is booming due to the huge demand, although it is affected by low supply of housing stock and material. Government’s ambition is to have at least 30 per cent of the population living in planned cities with access to basic and sustainable infrastructure by 2020. The target is contained in the country’s Vision 2020. However, the most recent national statistics show that the demand for housing units in the country, especially Kigali far outpaces the supply. Figures indicate that Rwanda needs 25,000 units annually with demand in Kigali city standing at 10,000 units. Only about 300 are provided per year. “The real estate industry faces a big problem of low supply of decent and affordable housing facilities as well as construction materials. We work with banks that offer mortgages so that the available housing can be marched with affordable rates on the market,” Haba said in an interview. Rwanda’s national housing policy stipulates that the urbanisation process must be accomplished with due regard to the needs of social development, and at the same time plan well to reduce negative environmental impact. With many banks now offering mortgage services, the reality of owning houses even by low income earners is imminent. Construction activities are spurred by a rising demand for housing but also a warm business environment, whereby, the country ranks first in the ease of doing business in the region. Statistics from the Rwanda Development Board, (RDB), indicate that from 2003-2008, investment in the construction sector grew from US$ 100 million (Ruff60b) to US$350 million (Rwf210b). In comparison to EAC, Kenya is a step ahead, but the opening of regional borders has created new opportunities to invest in Rwanda’s construction of industrial complexes and residential houses. Even in Tanzania, the reality of regional integration forced policy makers to revise land act laws to create a good climate for the revival of their slow real estate sector. Within the regional integration framework, Rwanda is being looked at as an emerging real estate market because of its quick business registration process and huge government support. Due to the necessity of their services, real estate developers are becoming a core ingredient of the economy and should play a big role in the realisation of the infrastructural aspect of Rwanda’s Vision 2020 and improvement in the public’s welfare. mugishaivan@yahoo.com