In a recent episode of the Long Form Podcast, Haba unpacked the forces driving Kigali’s property surge and the challenges of delivering homes for the city’s middle- and low-income earners.
Kigali’s property prices have soared, undeterred even by the COVID-19 pandemic, fueled by a staggering demand for housing.
Haba cited city statistics showing a need for 183,000 housing units, up from 34,000 just five years ago, driven by rural-to-urban migration, rising incomes, and the city’s expansion into areas like Kabuga. Yet, supply lags far behind, with fewer than 1,000 units built annually against a yearly need of 34,000.
“Because the supply is trying to catch up with an ever-growing demand, we are not about to see that bubble anytime soon,” Haba said, dismissing fears of a market crash.
The boom is most visible in high-end neighbourhoods like Nyarutarama and Gacuriro, where developers are erecting luxury apartments and commercial spaces. However, Haba emphasised that this masks a critical shortfall: the greatest demand lies in affordable and middle-income housing, segments developers often avoid.
Haba explained that building affordable homes is “not worth the headache” for private developers. High land costs, expensive financing—often at 15% interest or more—and slim profit margins deter investment in low-cost housing.
“If it’s going to cost you RWF 45 million to build a house and the market is telling you to sell it at RWF 46 million, you’ll just not do it,” he said.
Instead, developers target wealthier buyers, where margins are higher and demand remains strong, leaving low-income earners struggling to find decent rentals.
The disparity has created a stark divide. While bare hills in areas like Bumbogo and Masaka signal untapped potential, private investment remains concentrated in affluent zones. Haba noted that this trend mirrors regional patterns, where developers shift to affordable housing only when higher-end markets saturate—a stage Kigali has yet to reach.
Compounding the affordability crisis is the increasing practice of landlords pricing rentals in U.S. dollars, a trend Haba links to inflation concerns.
“Almost all business people… will cushion themselves against inflation or rising prices… either to mark up significantly or to dollarize whatever good or service that they are selling,” he noted.
This practice, despite being illegal under Rwanda’s central bank regulations, burdens tenants, as landlords demand payments in dollars for homes previously priced in Rwandan francs.
Haba criticised the informality of Kigali’s rental market, where many tenants lack tenancy agreements, leaving them vulnerable to arbitrary hikes. He urged renters to formalise contracts with clauses limiting rent increases, citing examples where agreements cap rises at 5% annually.
{{Government steps in
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Recognising the private sector’s reluctance, the Rwandan government is taking action. Haba highlighted a forthcoming special purpose vehicle (SPV) under the Rwanda Housing Authority to build affordable rental housing, targeting low-income earners.
Additionally, rehousing projects in Mpazi, Nyamirambo, and several other areas are densifying informal settlements, allowing residents to stay in urban areas with upgraded homes.
“They don’t move them away. They build for them more densified housing,” Haba said, praising initiatives that place 10 homes on plots once holding two.
Haba remains optimistic about Kigali’s market, buoyed by infrastructure like widespread tarmac roads and urban ambitions, including potential F1 hosting. However, he urged young Rwandans to invest in land, noting its 20-25% annual appreciation outpaces loan interest rates.
Watch the full podcast below:
