Rwanda’s Social Security fund to invest over $150 million in real estate project
Rwanda’s Social Security Board is to embark on construction of a modern housing estate in Kigali this year that is expected to help bridge the country’s accommodation and commercial housing.
The multi-million dollar project dubbed ‘Vision City’ will include luxurious condominium houses and detached units for medium and low income earners.
The project will be financed through a partnership with a private investor and down payments from interested buyers in the housing estate who will deposit 30 per cent as booking.
“The first phase which will begin this year is likely to cost $150 million. We are now looking for a solid investor (contractor) that will construct the houses,” said Afrique Ramba, the Deputy Director General of Rwanda Social Security Board (RSSB).
Mr Ramba added that RSSB is spending approximately $34 million on expropriation of inhabitants of the 160 hectares of land located in Gaculiro, a Kigali suburb where the Vision City will be built.
The first phase of the housing project will see 5000 units constructed with its own amenities including shopping malls, schools and hospitals.
“The estate is targeting to provide housing to all segments of the market- we shall provide a combination of high-end luxurious housing, semi-luxurious and medium income earners. We are trying to make it as affordable as possible but it’s a challenge because the cost of construction is still high,” Mr Ramba said.
Currently, Rwanda imports almost 90 per cent of the construction materials used in the country including cement which increases the cost of construction.
When completed the project is expected to ease Kigali’s current housing deficit that has pushed up the cost of housing. The project should be completed within maximum 5 years.
The country’s housing needs based on its demographic and urbanization trends are estimated at 25,000 units annually according to the National Bank of Rwanda: between 8,500 and 10,000 units for Kigali and 15,000 units for the rest of the urban centres.
As of 2006, housing supply was estimated at 10,000 per annum countrywide.
As a result of the huge supply gap, there has been a drastic increase in rent for both residential and commercial housing around Kigali.
Last year, commercial rentals went up by about 20 per cent specifically around the Central Business District (CBD).
Average cost per square metre around the CBD range from Rwf10, 800 ($18) to Rwf12, 000 ($20).
Residential rentals have increased to Rwf250, 000 ($416) on average for a three-bedroom house, from Rwf100, 000($166) in 2008.
“There is high demand for housing because even before we begin on the project about 1000 people including members of the diaspora have expressed interest in purchasing the units.
Part of the financing plan is to do pre-sales (sell the plan) – we are looking for 30 per cent deposit ( down payment) and the project will be guaranteed by government,” Mr Ramba said.
Currently, RSSB is the leading investor in real estate with several residential and office buildings around Kigali city with the real estate component of its investment portfolio accounting for 31 per cent or Rwf92 billion invested.
Among its key real estate projects also includes a residential housing project for low and medium income city dwellers on 240 hectares of land in Batsida in Kinyinya.