The first East African Housing Finance Seminar, sponsored by the Development Bank of Rwanda (BRD), was held in Kigali last week and brought together stakeholders to discuss ways to make houses affordable for all citizens, especially through residential Real Estate Investment Trusts (REITs).
Experts from the South African Center for Affordable Housing Finance (CAHF) explained how residential REITs work, and presented case studies from Tanzania and Kenya.
Rwanda is yet to have a residential REIT project implemented but with the support of BRD, one will be launched soon.
Residential REITs include trusts that specialize in apartment buildings, student housing, manufactured homes and single-family homes.
Kecia Rust from CAHF noted that the introduction of REITs is an innovative approach that policy makers, property developers and real estate investors in certain African countries are promoting in an attempt to address finance constraints in real-estate markets.
“CAHF wanted to explore this model further and commissioned a study that outlined the general context of REITs and specifically residential REITs globally and specifically in Africa, through case studies of REITs in Nigeria, Ghana, South Africa, Kenya, Rwanda, Tanzania and Morocco,” she said.
Fred Msemwa, the CEO of Watumishi Housing Company that implements residential REITs in Tanzania, said they started financing their projects through social security and pension funds.
“Social security institutions can invest up to 30% of their assets through collective investment schemes, and our REITs were able to benefit from this,” he explained.
He added that other investors can also buy the company’s REIT units after the lock-in period of three years once the units are registered on the Dar-es-Salaam Stock Exchange.
Thanks to this way of financing residential REITs, Msemwa said they are now able to construct housing units of as low as $13,000 each, which many people can afford in Tanzania.
After the seminar, the delegates visited the different affordable housing projects being undertaken in Kigali such as the Batsinda and Vision City projects.