{"id":15518,"date":"2022-04-19T14:49:26","date_gmt":"2022-04-19T14:49:26","guid":{"rendered":"https:\/\/www.africa-press.net\/rwanda\/all-news\/are-affordable-housing-projects-viable-in-rwanda"},"modified":"2022-04-19T15:17:45","modified_gmt":"2022-04-19T15:17:45","slug":"are-affordable-housing-projects-viable-in-rwanda","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda","title":{"rendered":"Are affordable housing projects viable in Rwanda?"},"content":{"rendered":"

Africa-Press – Rwanda. <\/strong><\/span>There is a need for integrated and tailored packages to pave the way for success of affordable housing projects in the country, real estate developers have suggested.<\/p>\n

According to a recent study Kigali City alone needs 310,000 new housing units by 2032 or around 20,700 units every year.<\/p>\n

However, less than 1,000 housing units are supplied every year.<\/p>\n

Yves Sangwa, the CEO of Rwanda Green Building Organization told Doing Business that affordable housing projects could be successful in Rwanda, \u201conce developers have access to cheap construction loans at least 8 per cent interest rate\u201d.<\/p>\n

An aerial view of Vision City in Gasabo District. Photo: File.<\/b><\/p>\n

\u201cWe have hope that Rwanda Development Bank \u2013BRD is working on it. Actually the house buyer gets a loan at 11 per cent but the developer gets a loan at 18 per cent in commercial banks,\u201d he said.<\/p>\n

He said that considering that building materials and shipping prices have also increased due to Covid-19 pandemic, tax incentives from Rwanda Development Board and Rwanda Revenue Authority should be reviewed.<\/p>\n

He added that the government should elaborate affordable housing green minimum compliance guidelines to make sure the constructed units are sustainable in terms of energy and water efficiency, indoor air quality and cost effectiveness.<\/p>\n

Jean Baptiste Nsengiyumva, a researcher in urban planning and Disaster and Natural Hazard Risk Manager said that studies on affordability should first be conducted so that projects are implemented after being informed by studies to meet needs of different categories of income earners.<\/p>\n

\u201cSome categories seem to be excluded by the expensive house products. The design of affordable projects should be inclusive with inputs from beneficiaries,\u201d he said, making the case for using a small piece of land to build storied-affordable houses.<\/p>\n

Charles Haba another, player in the real estate sector, said that the government should inject more incentives to investors.<\/p>\n

\u201cPublic Private Partnership is key in affordable projects. There is a need for direct support from the government. Some investors fear investing in affordable housing projects alone saying they are not profitable. It requires high cost in building affordable houses and the returns seem to be low and therefore subsidies such as providing land and basic infrastructure among others are needed,\u201d he said.<\/p>\n

Alexandre Nzirorera, a Rwandan engineer, who runs Nziza Training Academy that trains engineers told Doing Business that in general, affordable houses rent should not take more than 30 per cent of the earner\u2019s income.<\/p>\n

\u201cAffordable housing projects could also be delivered when the government injects in enough subsidies,\u201d he said.<\/p>\n

Need for innovation<\/b><\/p>\n

Nzirorera said that there is a need for innovation in the housing sector which can reduce the cost of affordable housing projects.<\/p>\n

\u201cWe need innovations that think of how five families can be housed on a piece of land where people have beliefs that it can only house three families. Innovation is also needed in construction materials that can be made from different materials,\u201d he noted.<\/p>\n

He said that when investors first assess financial capacity of affordable houses\u2019 clients, it can lead to innovation that responds to different levels of income earners\u2019 demand.<\/p>\n

\u201cGovernment can organise talent competitions to identify innovation that can ensure affordability. Then investors will see that the business is viable,\u201d he said.<\/p>\n

He said that in order to avoid projects from stalling for long-time, local companies should also embrace technologies that can fast-track the work.<\/p>\n

\u201cThere are dedicated and modern systems that are used to manage and fast-track construction projects but local companies are not shifting to use them,\u201d he said.<\/p>\n

The engineer added that technical studies of the projects are poorly designed explaining that this triggers projects\u2019 recurrent re-designing and stalling.<\/p>\n

Rwanda Housing Authority speaks out<\/b><\/p>\n

Rwanda Housing Authority (RHA) recently told this paper that the real estate developers, on several occasions, have underlined that construction projects of affordable homes are not profitable. Further, on the demand side, potential buyers cite that their incomes are very low relative to affordable houses on the market.<\/p>\n

Estate developers, it says, are constrained by high-interest rate loans from commercial banks as there are no specific funds to financing affordable housing projects at moderate loans.<\/p>\n

Due to the Covid pandemic, the cost of construction materials is hiking because of supply chain disruptions and rising transport costs.<\/p>\n

The government established a legal framework of providing infrastructure subsidies to developers\/investors in affordable housing.<\/p>\n

However, the agency said that, due to the hiking of market prices caused by Covid-19 disruptions of supply chains, the investors are reluctant to heavily invest in affordable homes because of marginal profitability and high offtake risk.<\/p>\n

\u201cTo respond to this challenge, the government is revisiting the subsidy policy to create a more attractive subsidy scheme and exploring the possibility of minimizing the uptake risk,\u201d the agency said adding that the government decided to exempt VAT on imported and locally made construction materials for affordable housing projects exceeding $10 million<\/p>\n

RHA officials added the government is also reviewing the existing policies, aiming to find a balancing point between the supply and demand sides.<\/p>\n

\u201cThere are still bottlenecks requiring the government\u2019s in-depth involvement to support and attract the supply side. There are also some other vital elements that the government is still considering and testing to expedite affordable housing supply,\u201d RHA said.<\/p>\n

Among other challenges, RHA, is that the cost of developable land is still high.<\/p>\n

\u201cThe government is exploring the possibility of enforcing a land banking strategy to facilitate the developers having easy access to land and at a cheap cost,\u201d the agency further noted.<\/p>\n

While some projects encountered financial distress worsened by Covid-19 pandemic, the government is facilitating them in terms of mobilizing solid partnerships with other potential developers to get back on track.<\/p>\n

\u201cThe government is exploring the possibility of playing a direct role in the supply of affordable homes,\u201d RHA says adding a separate social rental program (rent and rent to own scheme) is being designed to facilitate access to decent housing for low and extremely low-income earners.<\/p>\n

What are BRD\u2019s plans?<\/b><\/p>\n

Emmanuel Ahabwe, the Rwanda Housing Finance Project Coordinator at Development Bank of Rwanda (BRD) Plc told this paper that at the moment there is no particular fund for affordable housing developers since lowest interest rates are currently for buyers of houses.<\/p>\n

However, he said, , through the Economic Recovery Fund phase two, they will be able to access affordable financing for not only housing but a vast range of sectors.<\/p>\n

The fund has a total of $ 250 million of which BRD will be handling and managing $205 million and then $ 45 million by Business Development Fund.<\/p>\n

For More News And Analysis About Rwanda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Rwanda. There is a need for integrated and tailored packages to pave the way for success of affordable housing projects in the country, real estate developers have suggested. According to a recent study Kigali City alone needs 310,000 new housing units by 2032 or around 20,700 units every year. However, less than 1,000 […]<\/p>\n","protected":false},"author":84,"featured_media":15517,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,15,761,28],"tags":[760,763,758],"class_list":["post-15518","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-files","category-homepage-english","tag-africa-press","tag-africa-press-rwanda","tag-rwanda"],"yoast_head":"\nAre affordable housing projects viable in Rwanda? - Rwanda<\/title>\n<meta name=\"description\" content=\"There is a need for integrated and tailored packages to pave the way for success of affordable housing projects in the c ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are affordable housing projects viable in Rwanda?\" \/>\n<meta property=\"og:description\" content=\"There is a need for integrated and tailored packages to pave the way for success of affordable housing projects in the c ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda\" \/>\n<meta property=\"og:site_name\" content=\"Rwanda\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-19T14:49:26+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-19T15:17:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/rwanda\/sites\/23\/2022\/04\/postQueueImg_7-625ed27d2e23f.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"847\" \/>\n\t<meta property=\"og:image:height\" content=\"491\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Are affordable housing projects viable in Rwanda?\",\"datePublished\":\"2022-04-19T14:49:26+00:00\",\"dateModified\":\"2022-04-19T15:17:45+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda\"},\"wordCount\":1107,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/rwanda\/sites\/23\/2022\/04\/postQueueImg_7-625ed27d2e23f.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Rwanda\",\"Rwanda\"],\"articleSection\":[\"all news\",\"Economy\",\"files\",\"homepage-english\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda\",\"url\":\"https:\/\/www.africa-press.net\/rwanda\/economy\/are-affordable-housing-projects-viable-in-rwanda\",\"name\":\"Are affordable housing projects viable in Rwanda? 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