A study conducted about two years ago by the City of Kigali in collaboration with the Ministry of Infrastructure and the European Union (EU) estimated that the city could have a housing deficit of up to 350,000 residential units in 10 years if nothing is done to address the current shortage.
The housing shortage is mainly fuelled by the growing rate of rural-urban migration, currently at about 4.8 per cent, creating need for more houses.
The demand for habitable homes in the city and other areas in the provinces is also driven by the high rate of urbanisation, according to experts.
With urbanisation growing at 4.1 per cent, and almost 17 per cent of the population living in urban areas like Kigali, Musanze and Huye, real estate development essential to ensure sustainable growth.
And as government targets to achieve at least 35 per cent rate of urbanisation by 2020, it is critical to invest in infrastructure and facilities that will support this growth.
According to Liliane Mupende, the chief executive officer Ultimate Developers Limited, the rate at which the city is urbanising requires timely intervention and more investments in the housing facilities to be able to match the demand.
According to the City Masterplan, at least 43,436 social houses and 186,163 affordable houses are required annually by 2022, reflecting 54 per cent housing demand.
Mupende says projects, like Vision City 2020, that is currently underway, will go a long way in solving the housing challenges in Kigali.
The mega project in Gaculiro, Kinyinya sector in Gasabo District is expected to deliver to the market 504 housing units in phase one, but will have a total of 4,500 units, including luxury villas and apartments on completion.
The project is being financed by the Rwanda Social Security Board (RSSB) and will be built in four phases over period of eight years, says Mupende.
She says the Vision City project will have the capacity to accommodate over 22,000 people.
Fidel Ndayisaba, City of Kigali mayor, says for the city to be able to bridge the housing gap of about 3,000 units per year, a lot of investments in the real estate industry, especially to provide affordable houses, is needed.
At least 60 per cent of the city residents are renting, according to figures from City of Kigali. The city currently has a population of over 1.3 million.
Mupende says Vision City project will have a town, shopping malls, recreational and leisure facilities, like restaurants, as well as sports facilities and a club house. It will also house a three-star hotel, offices and a medium-sized conference centre with a capacity of hosting 2,000 people.
“The idea of Vision City 2020 is inspired by classical architecture, with a tinge of elegance and subtle nobility,” she told Business Times last week.
“We want it to be the reference point for contemporary Rwandan living, characterised by security, modernity, environmental friendliness and high quality living in a unique and hussle-free environment in Kigali city.”
Pradeep Kumar, the regional head of projects at Synergy, a company charged with implementation and monitoring of the Vision City 2020 project, says the component of quality and competitiveness the project is bringing to the market cannot be underestimated.
Kumar believes the project will make the local real estate market more competitive besides easing demand for residential and commercial office space.
“This will in the long-term transfer into more quality products and, ultimately, drive prices down wards,” Kumar argues.
The project is being undertaken by CCECC Limited, a Chinese company, with Synergy as the project designer and supervisor.
The company has more than doubled the number of employees to over 2,500 to deliver the project’s first phase on time – April 2016.
The issue of pricing
While Mupende admits that the first phase of Vision City is targeting high-income earners, she says plans are underway to use the same concept and bring to the market affordable facilities for middle and low-income market segments.
“We are now studying feedback from clients, which we hope to incorporate into phase two and three of the project,” she notes.
The prices range from $179,000 (about Rwf134.4 million) to about $560,000 (about Rwf420.6 million), depending on the size of the unit.
“The money can be paid in installments, but one has to deposit 30 per cent of the total cost and have up April 2016 to complete payment,” she says.
Mupende defends the prices as affordable for the target market, arguing that it would cost as much if one was to develop similar houses themselves.
Kumar says prices are high because the country relies on imported building materials.
Eng Fred Rwihunda, the president of the Institute of Engineers Rwanda, advises developers to source construction materials locally to cut prices.