Property owners and dealers in Kigali will have to align their business models to target emerging local brands to take up rental space, as government, which has been a key client, is building its own offices with the aim of cutting down on rental expenses.
The government is a preferred tenant because it takes up space for lengthy periods and is reliable in terms of payments, making it easier for the property owner to access credit.
Currently, government is almost completing two office complexes — in Kimihurura near the Prime Ministers office and in Kacyiru near Umubano Hotel.
The government is also waiting for the completion of the Albert building to finalise negotiations for its acquisition.
“Government has been a key tenant; constructing its own offices will affect the market; the three upcoming complexes are going to be a game changer,” said the managing director of Century Real Estate, Charles Haba.
The space rented by government has been shrinking over the past 10 years, and currently stands at 40,000 square meters.
“Constructing and acquiring its own structures is a long term solution to cutting down on government rental expenditure,” said the director-general of the National Housing Authority Eric Serubibi.
In 2012, government spent more than Rwf4 billion ($4.4 million) on renting offices for 31 public institutions.
Four ministries operated in rental facilities at an annual cost of Rwf721 million ($801,103).
However, as government cuts down on rental space, owners of strategically located high-end buildings are finding new clients in local brands seeking to occupy such spaces, including restaurants, clothing and supermarket stores.
Camellia Tea House, Brioche restaurant and Simba Supermarket are among brands that have taken up space in high-end buildings.
For example, the recently completed Kigali Business Centre complex is 80 per cent occupied by local brands.
“For a coffee shop to build its brand and succeed, quality accessible space in a prime location is essential. The upcoming buildings in Kigali have partly contributed to the growth of our brand,” said Khalid Nshuti, the managing director of Camellia Tea House, which has five outlets so far, and plans to open two more.
A few years ago, global retail brands seeking to enter the Rwandan market had to shelve their plans after failing to find quality space. This is now changing,
Foreign retail and coffee shop brands like Café Neo, Adidas, KFC, Java House, 360 degrees, Pizza Heart and Viva, as well as clothing lines such as F&F and By The Way ltd, have already secured space and will soon open their doors to the local market.
“Landlords are beginning to deliver better buildings because there is competition; it used to be a landlords market, now it is a tenants market” said Mr Haba.
He, however, cautioned that there is a likelihood of an oversupply of quality rental space in the next three years.