Businesses ask for more time to relocate from residential areas

With less than a month to the deadline issued to businesses and non-profit organisations operating from buildings designated for residential purposes to relocate to commercial complexes, a mini survey by The New Times has established that majority of them are yet to move.
A firm operating from a residential building in Kigali. File.
A firm operating from a residential building in Kigali. File.

With less than a month to the deadline issued to businesses and non-profit organisations operating from buildings designated for residential purposes to relocate to commercial complexes, a mini survey by The New Times has established that majority of them are yet to move.

In the meantime, a number of businesses and non-governmental organisations are appealing to city authorities for a deadline extension while others are seeking exemption.

In January, the City of Kigali issued a directive affecting close to a thousand enterprises operating from residential premises, with a deadline of end of March.

The directive was not very popular among business and NGOs with most claiming that it would increase their cost of operations while others said the commercial complexes were beyond their affordability range.

With about 27 days left to the lapse of the deadline, a spot check by The New Times shows that whereas some businesses have moved to commercial complexes, most are yet to move.

A number of firms and non-governmental organisations, speaking on condition of anonymity, confirmed to The New Times that they had approached the city authorities asking for extension of deadline or exemption.

Among the reasons why they want more time is that most organisations’ fiscal years begin in July and no unplanned expenditure can be approved before then.

They argued that they have to make a case to their donors on increased recurrent costs which, they say, could take time to approve while some donors may not approve.

Others claim that their medium term plans had not taken into account such expenditure and require time to incorporate it into their plans.

However, by press time, City of Kigali officials were yet to confirm whether or not they had given an allowance to any organisations.

Most real estate agents who spoke to this paper said that the demand for office space has not gone up as had been anticipated following the issuing of the directive.

Giving their reasons for not moving yet, a number of firms who sought anonymity said that the features of spaces in the market were not ideal while others said that they were yet to secure the finances required to move to a new complex.

Boniface Mukeshimana, the managing director of BOEM Consult, a firm involved in real estate management, told The New Times that even when the deadline looms, there has not been a remarkable increase of demand in office space as had been expected.

Paul Rwigamba, the director of commercial and residential realtor at Century Real Estate, also said the increase in demand has not been as much as anticipated earlier.

This, he explained, could be largely because some tenants had permits to work in residential areas up to a certain time and the directive might not affect them at the moment.

Century Real Estate is one of the largest real estate firms in the country. It manage a number of complexes across the city.

Towards the deadline, there was a general expectation that the prices for office space would drop.

However, little has changed price wise with Rwigamba explaining that some landlords and commercial enterprises are instead moving to improve the quality and experiences of commercial spaces.

“Commercial properties have modernised how an office should be,” he said.

A major challenge from the experience of most tenants searching office space is the options available in the market. Several tenants who are yet to move, including businesses and NGOs, said that the spaces available across the city are not convenient enough.

“We are used to offices with enough parking lots, and a cafeteria to create an ideal environment for both our staff and partners. Most of the office spaces in commercial complexes lack such features,” one tenant said.

This concern, coupled with the costs of spaces in commercial complexes, Rwigamba said, probably poses a challenge to most tenants.

However, said the tenant who preferred anonymity so as to speak freely, the public ought to look at the directive as key in terms of the bigger picture that will improve urban planning and the ecosystem including amenities such as water and electricity.

The implementation of the directive, the tenant noted, will not only encourage investors entering the sector but also influence the locations of investments.

Businesses are also being asked to consider alternative options such as co-working spaces whereby an office is shared by multiple tenants.

This would come in handy to cut on costs which most firms, especially small enterprises, have cited as a challenge.

Edwin Benzinge, the Kigali area manager for Regus, a commercial real estate agency that provides flexible office space solutions, said it was probably the best time for firms to look into the sharing model.

The firm, which is among the players offering the unique co-working option, said that it allows for flexibility of office space as well as working hours.

Under the model, firms have an option to pay for only the time that they use up an office.

“This is the best time to consider the option. It is ideal for all kinds of firms, from startups to multi-nationals,” he said.

Pacifique Tusabyimana, a community player working with young entrepreneurs, said it was time to consider innovative options such as co-working spaces and online stores to reduce costs and remain relevant.

editorial@newtimes.co.rw

 

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