US$540 million worth of property registered by RDB Local developers set to benefit from new sources of funding in 2018 Over US$1.6 billion in pipelines for next 2-3 years
Rwanda’s property market registered investments worth US$540 million according to Rwanda Development Board (RDB).Reacting to statistics by RDB, experts say that the investment registered last year point on an ongoing property boom despite skepticism from some quarters.
The growth in the property market is attributed to increased funding sources and favorable business environment for sector investors according to property market experts.
Given the high growth prospects, the pipelines for property under development is expected to increase this year by threefold as opposed to last year fueled by growing appetite by investors.
In particular, new sources of funding especially foreign direct investment (FDIs) is expected to complement traditional sources. The combination of the two is expected to fuel development of healthy pipeline.
Official statistics by RDB indicate that the three major investments registered last year included Bugesera Airport Co Ltd-the concessionaire of the Bugesera airport project worth US$398.6 million, Gasabo Investment Co Ltd-developer of Kimironko bus park worth US$89.0 million and Kigali View Hotel and Apartments Co. Ltd a real estate firm worth US$53.2 million..
RDB CEO Clare Akamanzi says;
“ Registered investments across board in the last 10 years doubled from less than US$800 million to more than US$1.6 billion .This is a clear indication that Rwanda is seeing more and more of investment generation”.
Akamanzi adds that
“the 2017 registered investment coming at the back of increasing investments over the last 10 years is a direct result of the initiatives by the government of Rwanda through RDB to assist investors to fast track their investments on the ground”.
Real estate and construction both considered part of Rwanda’s property sector has emerged as the key driver and major contributor to Rwanda’s registered investments.The precise amount of gross floor area added into property market by investors in 2017 is not readily available by the time we went to press.However, estimates have been provided to Property Magazine Rwanda by experts familiar with the matter.
Fred Omondi Ofuwa a practicing Kigali based architect in last 5 years says; “investors are still bullish about Rwanda’s property development market. So it is reasonable to talk about between 500,000-750,000 Sq metres of new property space that was brought to the market last year with over 80 percent being commercial and retail space while balance being residential .It is also reasonable to state that over 2,000,000 sq metre of property space is being developed as property pipeline in the next 2 years”.
Ofuwa adds; “Built at a cost of approx. US$750 per square metre it is reasonable to corroborate RDB reports by stating that investors pumped in over US$540 million last year into Rwanda’s economy and intends to pump into economy over US$1.6 billion in the next 2 to 3 years.”
Property development sector is traditionally funded through equity plus debt funding from local banks. However, Rwanda is increasingly attracting FDIs backed by locally available sources.
A case in point is the Kigali Heights a flagship retail property that delivered an additional 30,000 square metre of space in Kimihurura. The property that scooped a coveted continental award last year was built using FDIs.
Given the scale of FDIs estimated at US$40 million the Kigali Heights property offers retailers and other commercial operators top grade offices and a 9 storey rectilinear block along a boulevard frontage and a 6 storey block.
Experts say that in 2018 Kigali city is set to see construction works commence on newer and more exciting projects both in residential housing and retail and commercial space provision.
According to sector experts,the healthy pipeline includes the Amarembo complex fronted by local investment firm ABG Group and Equity Towers fronted by regional banker Equity Bank Group both in central business district and the Savannah Creek residential development in Kicukiro district fronted by business magnate Dennis Karera.
This sort of pipeline further signals the continued bullish nature of investors in the property market.