> The population of Rwanda’s capital roughly doubled in the last two decades. But the real challenge comes when it does so again over the next 2 ½ decades as rural citizens flood urban centers in search of opportunities.
> The runaway expansion makes Kigali one of the fastest-growing cities globally and creates huge demand for decent housing in what remains one of the world’s smallest and poorest countries, despite an average annual growth rate of 7% since 2009, among the highest in the world.
> The situation is creating a challenge for developers and planning authorities, who — to maximize space — are building apartments in double- and triple-story blocks for buyers in a culture that values standalone homes but have limited means to buy them.
> “Over the last 10 years, we have seen huge growth of all urban areas: People are building, but our cities have been growing horizontally,” said Alphonse Rukaburandekwe, the director general of the Rwanda Housing Authority. “We are trying to organize to use our land better because we don’t have much land. Our culture needs to change to understand that you can actually live in an integrated community.”
> More than 35% of the population will live urban areas by 2030, compared with 16% in 2010, according to the RHA. That means about 4.5 million people are headed for towns and cities in the next six years, and they’re mainly going to Kigali, which is by far the landlocked country’s largest city, with about 1.7 million residents now.
> Struggling to keep up with demand, Kigali’s authorities and developers are unable to adequately house everyone, which means about 79% of residents live in unplanned settlements with limited access to transport, water, power and sanitation, according to the World Bank.
> Many of these are hidden from view, nestled deep in the valleys of the nation known as the land of a thousand hills. Most laborers in jobs such as construction rent single rooms in mud-brick structures with shared bathrooms and toilets in these settlements.
> The RHA calculates that Kigali alone needs about 25,000 affordable units annually to accommodate everyone. Over the past decade, the government has partnered with the World Bank and private sector to build homes, but they’ve only managed to construct 2,600 spaces in total, despite incentives such as tax breaks.
> Home suppliers and prospective buyers are so far stumped on how to deal with the mismatch in supply and demand, where affordability plays a massive role.
> Almost a third of Kigali’s households earn less than $200 monthly, while the cheapest single-bedroom unit sells for $15,000. To qualify for a 20-year mortgage at a 11%, a household would need to prove earnings of at least $700, locking many people out of affordable housing. Only 8% of Rwandan homes are bought with mortgages.
> Developers — who import the bulk of their inputs such as steel — are trying to come up with solutions amid a franc that has lost 75% of its value against the dollar since 2000 and is currently trading at a record low against the greenback, eroding profitability.
> “To us, the biggest risk as a developer is the vulnerability to foreign exchange and the lack of industrialization,” said Hassan Hassan, the chief executive officer of Adhi Rwanda Ltd., which the government in December 2020 contracted to deliver 2,208 units on 30 hectares by 2027.
> The pilot phase that started in July 2022 consisted of 247 homes ranging from one- to four-bedroom duplexes starting at 21 million francs, rising to 106 million francs. Adhi completed the build in September last year, with more than 70% of units sold.
> To address the liquidity challenge in the market, the Rwandan government in 2019 received $150 million from the World Bank to increase access to housing finance for both developers and prospective buyers.
> The Development Bank of Rwanda lends to builders at 12%, less than the market rate of up to 18%. In turn, that helps reduce mortgage rates to 11%, depending on the household’s income bracket. Banks and other financial institutions are also tapping into the funding, accessing the money at 6%.
> Culture — both in dealing with finances and how people live — also plays a big role in projects’ success. Rwandans don’t have a tradition of buying off plan, and most deals close once construction is finished and the homes are staged, further driving up costs for developers.
> Locals also prefer standalone units, while affordable units are designed as apartments.
> Rwanda’s success in rebuilding its economy after a 1994 genocide that saw as many as 660,000 people killed is so admired by other governments that the country set up a quasi-consultancy to share tips on how other administrations could reproduce the results.
> But it has yet to figure out how to extend its victories in fiscal discipline and government efficiency to affordable housing in a country where almost half the population still lives below the poverty line.
> The nation has taken novel steps to boost its revenue and standing in the international arena. Its Visit Rwanda campaign has sponsorship deals with English football club Arsenal and French counterpart Paris Saint-Germain for about $10 million annually in a bid to bolster tourism, a key source of revenue.
> Last year, the British paid Rwanda £240 million ($321 million) to take in thousands of migrants being held in facilities in the UK, although no one has yet been deported. London paid 60 billion Rwandan francs ($45 million) to build 1,500 units on 12 hectares in Gahanga on Kigali’s southeastern outskirts to accommodate asylum seekers. The units are near completion, Doris Uwicyeza Picard, who is coordinating the project, told local media.
> A decade into its housing endeavor for locals and with little success, Kigali has gone back to the drawing board, with its city council approving an updated master plan called Kigali Yacu, which means “our Kigali” in the local Kinyarwanda language.
> Developed with SMEC — a global infrastructure advisory firm that’s owned by a unit of Singapore’s state-owned investor Temasek Holdings — the plan will see the city accommodate 3.8 million people and create 1.8 million jobs by 2050.
> “We are developing a new housing strategy,” Rukaburandekwe said. “Once we get a very well-organized structure for these affordable programs, we do believe that we can meet the demand.”
1 Comment
> The population of Rwanda’s capital roughly doubled in the last two decades. But the real challenge comes when it does so again over the next 2 ½ decades as rural citizens flood urban centers in search of opportunities.
> The runaway expansion makes Kigali one of the fastest-growing cities globally and creates huge demand for decent housing in what remains one of the world’s smallest and poorest countries, despite an average annual growth rate of 7% since 2009, among the highest in the world.
> The situation is creating a challenge for developers and planning authorities, who — to maximize space — are building apartments in double- and triple-story blocks for buyers in a culture that values standalone homes but have limited means to buy them.
> “Over the last 10 years, we have seen huge growth of all urban areas: People are building, but our cities have been growing horizontally,” said Alphonse Rukaburandekwe, the director general of the Rwanda Housing Authority. “We are trying to organize to use our land better because we don’t have much land. Our culture needs to change to understand that you can actually live in an integrated community.”
> More than 35% of the population will live urban areas by 2030, compared with 16% in 2010, according to the RHA. That means about 4.5 million people are headed for towns and cities in the next six years, and they’re mainly going to Kigali, which is by far the landlocked country’s largest city, with about 1.7 million residents now.
> Struggling to keep up with demand, Kigali’s authorities and developers are unable to adequately house everyone, which means about 79% of residents live in unplanned settlements with limited access to transport, water, power and sanitation, according to the World Bank.
> Many of these are hidden from view, nestled deep in the valleys of the nation known as the land of a thousand hills. Most laborers in jobs such as construction rent single rooms in mud-brick structures with shared bathrooms and toilets in these settlements.
> The RHA calculates that Kigali alone needs about 25,000 affordable units annually to accommodate everyone. Over the past decade, the government has partnered with the World Bank and private sector to build homes, but they’ve only managed to construct 2,600 spaces in total, despite incentives such as tax breaks.
> Home suppliers and prospective buyers are so far stumped on how to deal with the mismatch in supply and demand, where affordability plays a massive role.
> Almost a third of Kigali’s households earn less than $200 monthly, while the cheapest single-bedroom unit sells for $15,000. To qualify for a 20-year mortgage at a 11%, a household would need to prove earnings of at least $700, locking many people out of affordable housing. Only 8% of Rwandan homes are bought with mortgages.
> Developers — who import the bulk of their inputs such as steel — are trying to come up with solutions amid a franc that has lost 75% of its value against the dollar since 2000 and is currently trading at a record low against the greenback, eroding profitability.
> “To us, the biggest risk as a developer is the vulnerability to foreign exchange and the lack of industrialization,” said Hassan Hassan, the chief executive officer of Adhi Rwanda Ltd., which the government in December 2020 contracted to deliver 2,208 units on 30 hectares by 2027.
> The pilot phase that started in July 2022 consisted of 247 homes ranging from one- to four-bedroom duplexes starting at 21 million francs, rising to 106 million francs. Adhi completed the build in September last year, with more than 70% of units sold.
> To address the liquidity challenge in the market, the Rwandan government in 2019 received $150 million from the World Bank to increase access to housing finance for both developers and prospective buyers.
> The Development Bank of Rwanda lends to builders at 12%, less than the market rate of up to 18%. In turn, that helps reduce mortgage rates to 11%, depending on the household’s income bracket. Banks and other financial institutions are also tapping into the funding, accessing the money at 6%.
> Culture — both in dealing with finances and how people live — also plays a big role in projects’ success. Rwandans don’t have a tradition of buying off plan, and most deals close once construction is finished and the homes are staged, further driving up costs for developers.
> Locals also prefer standalone units, while affordable units are designed as apartments.
> Rwanda’s success in rebuilding its economy after a 1994 genocide that saw as many as 660,000 people killed is so admired by other governments that the country set up a quasi-consultancy to share tips on how other administrations could reproduce the results.
> But it has yet to figure out how to extend its victories in fiscal discipline and government efficiency to affordable housing in a country where almost half the population still lives below the poverty line.
> The nation has taken novel steps to boost its revenue and standing in the international arena. Its Visit Rwanda campaign has sponsorship deals with English football club Arsenal and French counterpart Paris Saint-Germain for about $10 million annually in a bid to bolster tourism, a key source of revenue.
> Last year, the British paid Rwanda £240 million ($321 million) to take in thousands of migrants being held in facilities in the UK, although no one has yet been deported. London paid 60 billion Rwandan francs ($45 million) to build 1,500 units on 12 hectares in Gahanga on Kigali’s southeastern outskirts to accommodate asylum seekers. The units are near completion, Doris Uwicyeza Picard, who is coordinating the project, told local media.
> A decade into its housing endeavor for locals and with little success, Kigali has gone back to the drawing board, with its city council approving an updated master plan called Kigali Yacu, which means “our Kigali” in the local Kinyarwanda language.
> Developed with SMEC — a global infrastructure advisory firm that’s owned by a unit of Singapore’s state-owned investor Temasek Holdings — the plan will see the city accommodate 3.8 million people and create 1.8 million jobs by 2050.
> “We are developing a new housing strategy,” Rukaburandekwe said. “Once we get a very well-organized structure for these affordable programs, we do believe that we can meet the demand.”
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