Real Estate industry urged to consider joint ventures

With the high demand for housing and real estate being a capital intensive field, developers have been urged to consider a joint venture model where partnerships are developed to cut the cost of individual inputs.
An emerging neighbourhood in Kicukiro. The government has been urged to intervene in the sector by subsidising land and developing the necessary infrastructure. Inset is Essien.   The New Times/ File.
An emerging neighbourhood in Kicukiro. The government has been urged to intervene in the sector by subsidising land and developing the necessary infrastructure. Inset is Essien. The New Times/ File.

With the high demand for housing and real estate being a capital intensive field, developers have been urged to consider a joint venture model where partnerships are developed to cut the cost of individual inputs.

During an exclusive interview with The New Times last week, Mark Essien, the managing partner of Cromwell Urbane Developments Limited, a Nigerian 0wned real estate firm, said the model will not only encourage people to invest in real estate, but will also create public confidence in investors as they also have a stake in the property.

“To ensure that we reduce the number of people who can not access affordable housing in the country, we intend to put in place a model that will cater for the middle class who find it hard owning a home when they go it alone. Through partnerships with real estate firms and financiers their chances of owning homes are higher,” Essien said.

The real estate expert also defended the private real estate developers on the issue of unaffordable housing, saying the government is the key player that can directly influence the cost of housing.

“The challenge in real estate is that there are factors that are beyond the private sector players. When a private developer acquires land and develops it, it could easily be out of the financial reach of most citizens by the time he is done working on it,” Essien said.

He said government’s intervention in ways such as subsidising land and developing the necessary infrastructure would go along way in reducing the cost of housing.

“Government, being the main regulator, can provide incentives to developers by subsidising land as well as developing necessary infrastructure such as water services and roads required for the construction to go on. With that the cost of the developed housing units or property can be controlled and the government can also put price caps on the cost of property to protect buyers,” Essien added.

Real estate professionals in the country have previously cited the cost of construction materials as a reason for high housing costs. Essien suggested that government can reduce the cost of construction materials by bringing in firms involved in producing and considering tax exemptions for imports.

A 2012 study of housing in Kigali indicated that an average modern bungalow that a middle-income earner would ideally own costs about Rwf70 million in the city which is already out of reach of most middle-income earners with their income bracket being between Rwf200,000 and Rwf600,000

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