The pensions body has been faulted over its plans to use workers’ savings to invest in high-end housing, a market which is already saturated.

Public outcry expressed mainly on social media follows an e-mail sent out by Rwanda Social Security Board (RSSB) to what it considered potential clients on Monday requesting them to book units at the multibillion-dollar Vision City Housing Project, whose construction is ongoing.

RSSB is investing Rwf71 billion in 504 new housing units on a 158 hectare tract of land in the Kigali suburb of Gaculiro in Kinyinya Sector, Gasabo District.

Part of a bigger project

This is part of a bigger project in which 4,500 upmarket houses ranging from luxury villas to apartments are to be built in four phases over eight years.

The Gaculiro houses are scheduled to be completed by August next year.

In the e-mail, seen by Rwanda Today, the proposed units will cost upwards of Rwf124 million for a two-bedroom apartment and Rwf389 million for a luxury five-bedroom one. The terms of payment are a 30 per cent payment of the sale price and 10 per cent every three months.

However, supply of houses targeting the upper class has surpassed demand, leading to a decline in their prices.

For instance, since last year, rent for high-end residential housing has dropped to approximately $1,300 (Rwf900,000) from about $2,000 (Rwf1.4 million) a few years ago. Because of that, most landlords prefer to occupy their houses or turn them into guesthouses, restaurants and offices.

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Charles Haba, president of Real Estate Association of Rwanda (Rear), said he expected RSSB to prioritise investment in houses that respond to the housing needs of its contributors.

“RSSB should be the last developer to invest in that market,” Mr Haba said, adding that the social security fund was risking worker’s pensions.

Rwanda requires at least 25,000 housing units annually but developers say the cost of land, mortgages and building materials have made it difficult for more investment in the sector. The country imports almost 80 per cent of its construction materials from neighbouring countries and overseas.

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RSSB however said it plans to build housing units targeting all segments of the population. It said it plans to build houses for all market segments in phases, starting soon.

“By April, a tender will be awarded to contractors to start constructing houses for the middle class in Kinyinya,” said Mpunikira Bahati, director of Investment at RSSB.

There are plans to build 3,700 two- to four-bedroom units set out in four-storey apartment buildings in Kinyinya. But the low-income earners, who form the majority of the city population, may have to wait a little longer for the affordable houses from RSSB.

Although RSSB has identified land in Basinda for low-cost housing units, only 380 are planned in the first phase. Unfortunately, the pensions body is yet to decide on the type of technology to use.

Houses in bad condition

A recent survey carried out by the city council showed that about 80 per cent of the houses in Kigali are in a bad condition. According to the study, Kigali needs 350,000 house units between 2012 and 2022 in order for the city dwellers from different classes of incomes to be housed.

While Rwanda’s construction sector continues to thrive, growing at over 10 per cent in recent years, most of the construction is of commercial buildings due to the rapid economic growth.

The few real estate developers who have ventured into residential housing have focused on the upper end of the market, creating a chronic shortage for the low- and middle-income earners.

The study shows that 78 per cent of the houses required to plug the city’s housing gap are for households with a monthly income of Rwf300,000 or less.

“This is where the challenge lies because many of the developers in the city have put more emphasis on building for the premium class, which is more profitable,” Marco Antonio Cuevas Juarez, the architect behind the survey, observed.

While commercial banks recently repackaged their home and mortgage products to make them attractive to buyers, the loans remain too expensive for ordinary Rwandans. On average, a house that is considered affordable costs Rwf40 million ($57,662) but attracts an interest rate of at least 18 per cent for 20 years.

While this is relatively lower compared with those in Kenya and Uganda, it is still too dear, considering the size of Rwanda’s economy.