MANY HOUS­ING REITS, NOT ENOUGH EA TAK­ERS

The East African - - NEWS -

East African coun­tries are strug­gling to at­tract pri­vate in­vestors to the prop­erty mar­ket through the stock ex­changes, thanks to high land prices and high cost of con­struc­tion ma­te­ri­als.

By KABONA ES­IARA

RWANDA IS seek­ing Rwf264 bil­lion ($300 mil­lion) from in­ter­na­tional lenders in the com­ing months to ad­dress the short­age of hous­ing on the mar­ket.

has learnt that the World Bank Board is ex­pected to ap­prove a $150 mil­lion long-term credit line to fi­nance Rwanda’s hous­ing needs on Septem­ber 27, while the govern­ment ex­pects an ad­di­tional $150 mil­lion from the In­ter­na­tional Fi­nance Cor­po­ra­tion (IFC) and In­dia Hous­ing Bank.

“The IFC is lead­ing the credit mo­bil­i­sa­tion process,” said Claver Gatete In­fra­struc­ture Min­is­ter, adding that govern­ment is also mak­ing land avail­able and in­tro­duced a 30 per cent tax re­bate for de­vel­op­ers of high den­sity hous­ing units.

An­a­lysts say the govern­ment is tak­ing con­ces­sional loans to cre­ate liq­uid­ity in the mort­gage mar­ket, mean­ing that the banks will be able to off­load some of their mort­gage book to cre­ate liq­uid­ity for new loans.

An­a­lysts cite lack of longterm fi­nance for the low sup­ply of af­ford­able hous­ing and the ex­pen­sive mort­gage fi­nanc­ing in Rwanda.

The new credit line is ex­pected to push hous­ing prices and mort­gage loans down­wards by 400-600 ba­sis points, from the cur­rent base­line lend­ing rate of 16 per cent down to 10-12 per cent.

While the banks have grown their mort­gage and hous­ing loan­books over the years, they mostly lend to salaried em­ploy­ees earn­ing over Rwf700,000 ($795) per month, leav­ing out a ma­jor­ity of the pop­u­la­tion.

A few re­sort to build­ing their homes in phases and use sub­stan­dard build­ing ma­te­ri­als, con­tribut­ing to the rise of in­for­mal set­tle­ments where a ma­jor­ity of house­holds now live.

Prop­erty de­vel­op­ers say the an­nual stock of new af­ford­able hous­ing units has re­mained low, av­er­ag­ing 1,000 units only.

How­ever, has learnt that in­cen­tivis­ing af­ford­able hous­ing de­vel­op­ment is be­gin­ning to pay off as the govern­ment foots some of the costs.

As a re­sult, some 10,000 hous­ing units for the lower, mid and high-end mar­ket are in the pipe­line.

Prop­erty ad­vis­ers see more busi­ness prospects in smaller three- and two-bed­roomed units as the mar­ket seg­ment is larger.

They ar­gue that Kampala and Nairobi’s rental busi­ness is boom­ing, partly be­cause de­vel­op­ers have tapped into the mass mar­ket of young peo­ple seek­ing houses to rent in well-planned neigh­bour-

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.