In an attempt to address the growing deficit of affordable housing in the City of Kigali, Rwanda Social Security Board (RSSB) has announced plans to ‘soon’ break ground for a housing estate that will deliver homes for as little as Rwf35 million. This is part of the plan by the pension body to diversify its investment portfolio into affordable homes for the low income earners. The entity will in a few days invite local property developers to express interest in the development of housing units in the suburbs of Gasogi, Rusororo and Kinyinya all in Gasabo District. According to officials at RSSB, the agency is targeting at availing properties valued at not more that Rwf35m which is the threshold for affordable houses in the country according to Rwanda Housing Authority. Highly placed sources say that ‘in about two weeks’, RSSB will issue an expression of interest inviting companies and property developers for the affordable housing development project. The pension body will avail land for the firms to set up model houses for exhibition and invite RSSB subscribers to select the most ideal houses on the basis of quality, cost among other aspects. RSSB Director-General Regis Rugemanshuro said that the new housing model has been developed by blending previous real estate investments by the firm with trends in the local market. Unlike previous housing project, he said that this will feature the public’s inputs. The development of sample houses for clients’ review, he said, will serve as proof of concept and will provide members and potential clients a chance to pick their preferred housing model. Public participation could salvage RSSB’s image from previous perception of being distant from its contributors (members) going by the previous investments such as Vision City Estate. The selected model will be developed commercially as an affordable housing project. The housing will be three storied flats. Rugemanshuro said that unlike the previous projects whereby they sought buyers on completion of construction, the new project will be on the basis of demand with buyers’ commitment fees prior to commencement of construction. “That will ensure that quality is not compromised in the pursuit for affordability. We will also be certain that there is demand as opposed to building houses and waiting for demand,” he said. RSSB will work with local financiers to secure loans for potential home owners at lower rates. By building on demand, RSSB could minimize chances of re-occurrence of having more property than market demand as has been the case in Vision City Estate which has resulted in maintenance costs as properties seek buyers. The Rwf35 million price mark for affordable houses was set in 2018 following a study by Rwanda Housing Authority and the World Bank. However, since then, prices of some construction inputs and material have gone up, putting doubt on the chances of development of properties valued at Rwf35 million and below. The Deputy Director General in charge of Fund Management Jean Marie Gacandaga told The New Times that they are aware of the concerns but have the advantage of economies of scale to keep the costs minimal and achieve some profit margin. He however said that the project is more in pursuit of delivering value to members than delivering profits. The affordable housing project is one of RSSB pipeline investments in the new 5 year strategic plan which officials said has a members’ first orientation and operational efficiency. Previously members of the public and parliamentarians have expressed concern that RSSB has often made investments in sectors that are outside the affordability range of the majority of the contributors. Real estate and property development experts say the model to invite bidders to ensure competition in quality and cost is progressive but are wary of the realization of the price tag especially in Kigali. René Ngabo, a consultant in property development and real estate management told The New Times that given the challenges that have characterized a number of housing projects previously, involvement of RSSB will among other things create confidence for potential homeowners. Ngabo, however, said that it might be necessary to incentivize the project for developers involved to ensure that the pursuit of affordability does not compromise quality. “For the successful completion of an affordable housing project, there are necessary elements such as availability of affordable and competitive construction inputs. This is still a work in progress in the local market especially when it involves large scale projects. Technology used will also be a major determinant of the achievement of the affordability targets,” Ngabo said. When implemented, he said that the project will be most ideal for the middle class with an average monthly income range of Rwf350,000 if a tenure of above 20 years is negotiated. De-risking factor Local bankers say that the involvement of RSSB in the project would de-risk it for banks to extend loans to buyers. Some bankers said that the project could further be de-risked by using ones’ pension benefits as collateral as is the case in some markets. The annual housing demand was estimated at 31,279 housing units per year against the supply of about 1000 units creating an annual deficit of about 30,000 dwelling units. With urbanisation expected to rise to 35 per cent urban by 2024, the housing demand is expected to rise further in coming years.
