RDB Chief Executive Officer, Clare Akamanzi led the negotiations on behalf of government of Rwanda with the Israeli firm. Rwanda Development Board (RDB) in mid June 2018 signed a Memorandum of Understanding (MoU) with Mitrelli Group from Israel meant to enable the latter to design and construct upto 10,000 housing units in Kigali Rwanda.
Mitrelli Group a firm that specialises in large-scale long-term projects says that its main focus of delivery is affordable homes. Signing the MOU, Haim Taib, Founder and President of Mitrelli Group, lauded RDB for the government’s readiness to cooperate and partner with them.
“This project is a very nice challenge for us. We have the knowledge, the funds, the expertise and the ability to complete this project. I believe that the two sides have the same goal. The goal being to develop the best project for the people of Rwanda. We have come to Rwanda to stay,” he said. Signing on behalf of Rwanda Development Board, Chief Executive Clare Akamanzi, said that the investment was timely as there is a growing housing demand in the country.
“Mitrelli Group is the kind of investor that we want in Rwanda. We are happy to work with you in providing housing for the growing housing market,”
she said. The signing ceremony was also witnessed by Mazen Al Sawwaf, the Chief Executive and founder of Global Investment Holding Company, a Saudi Arabian holding company. Access to affordable housing remains one of the key priorities for the government of Rwanda and there are a number of strategic incentives to attract local and international investors in the sector.
According to a 2012 study “Housing Market Demand, Housing Finance and Housing Preferences for the City of Kigali” conducted by Planet a consultancy hired by city of Kigali authorities, it is estimated that the annual demand for new dwellings is estimated at 31,279 housing units per year against the supply of about 1,000 units. The housing demand is expected to reach 340,000 units by 2022, mainly for affordable and mid-range housing.
RDB says that more investors are needed in the real estate and construction sector so as to ensure provision of affordable housing whose value chain needs to be strengthened in order to lower construction costs and by extension reduce retail prices of stocks. In the last 10 years , the focus by developers in the local market was in provision of high end properties leading to acute shortage on lower priced units.
Among the properties developed targeting high end clients includes The Vision City being built at Gaculiro by Rwanda Social Security Board. Another notable high end project is the Century Park Residences being built in Nyarutarama by Doyelcy Co Ltd and the Residence being built at Nyarutarama by the Opulent Group.
The precise details of the new investor seeking a piece of the opportunity in affordable housing provision remained scanty by the time of going to press. However , technical experts familiar with affordable housing provision state that upwards of US$500 million in terms of cost of production from site acquisition to set up of super structures and external works and finishing as well as marketing would be required to fully supply the target 10,000 units.
“In the context of design and construction in Kigali of affordable homes it is reasonable to take an average of US$50,000 per unit of stocks supplied and ready for occupation. Assuming of course that the units are measuring 100 sq metre or less”,
Fred Ofuwa a practicing architect says.
“Of course in order for the developer to make returns and therefore make some business sense, there is need to throw in recently passed incentives by the government of Rwanda to fund some of the prohibitive costs that have been hindering entry of developers such as external works and even site acquisition”.
Official statistics indicate that the real estate sector contribution is pegged at more than 8 per cent of Rwanda’s GDP.
RDB states that investment in real estate and construction sector has grown from $100 million to $596 million over the last 14 years driven by rising consumer demand and improvements in public infrastructure.
Additional editing and context by The Property Magazine editorial team