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Rwanda is a country which is in a “post-genocide” environment seeking to evolve, grow and develop. It is the most densely populated country in Africa, and Kigali, the capital city, has grown nearly four-fold in the last 15 years to almost 1 million inhabitants. It has experienced steady economic growth over the past several years but the real estate industry is still in its industry. The government of Rwanda is making concerted efforts to modernize and streamline land policy and is developing laws, rules and regulations for expropriated land as well as currently writing a law for real estate valuation and a human settlement law. The Central Bank has been the primary watchdog of the valuation industry “certifying” those individuals and offices which evidence some training and experience in valuation techniques.

Brokerage

The brokerage community as it exists in Rwanda is wholly disorganized and primarily focuses on rentals for the middle to high end and the expat markers and an occasional new property sale and does very little in the “secondary” existing homes market. Since land has been difficult to secure title to and no significant methodology is in place to value land, that market has been very thin. The Government, however, is pushing towards creating a land market through a proposed human settlements law and expropriation law to help guide the future growth of communities in Rwanda. Each of these activities will help both build the data base for land valuations but also stimulate additional brokerage activities.

There is a development community that currently is building several projects in 100-350 unit increments with some of the 800 units currently in the planning or underway in the market. These will stimulate additional brokerage but most of it is being marketed by the developers themselves and not by outside brokerage firms.

What seems clear from this profile is that the real estate brokerage industry is struggling to maintain profitability and to try to gain market share. One of the severe difficulties is attempting to determine what comes first a legitimate brokerage community that stimulates the market or a growing market that allows real estate practitioners to make a living in it. It does seem clear that there are currently insufficient numbers to create any self-sustaining organization for the brokerage community. A possible solution could be creating a real estate association which had a primary function of working with the valuers but would also provide some programming for brokers and additional programming for the development community.

Any training that is brought to the market for the brokerage community will have to be substantially remedial dealing with: “How to organize a real estate company,” and the “Services that legitimate real estate companies do supply.”

Because individuals and companies do not make a great deal of money, reliance on dues at the beginning of an association’s development is highly unlikely. Short-term assistance will be necessary to help them organize and gain stature and strength and perhaps they can move to self-sufficiency in two to three years.
Appraisal

There is no appraisal association in Rwanda. The major credential that most appraisers rely on is to be listed in the National Bank of Rwanda (Central Bank) list of Real Estate valuers. This list of valuers numbers 29 of which five are individuals and twenty-four are companies.

We could find no appraisal firm that holds itself out as providing services to banks in the private sector strictly as an appraiser. The primary methodology for appraisal in Rwanda is “replacement value analysis.” The bulk of the appraisers have a background of being either an architect or civil engineer. As a consequence, they rely on analyzing the cost to replace the present facility and then depreciate it based on age, materials and general overall condition. The Housing Bank has some in-house appraisers but also require an independent, third-party appraiser. We could not review the work of any of the Housing Bank’s appraisers.

Rwanda is at a substantial competitive disadvantage in attracting Direct Foreign Investment without a valuation community that understands both European and world standards and develops the consistent use of accepted methodologies of valuation. It is extremely difficult for an outside investor to bring in a third party valuer from another country and rely on their judgment without having local expertise that understands the market, has an adequate data base, and the methodologies to assist an outside valuer.

To open the opportunities for better real estate finance and outside direct investment, this community must be developed. The numbers are relatively low of those that have committed to full-time employment as valuers. The question remains whether there is sufficient future potential market through the growth of particularly Kigali but also other sub-markets in the country where banks will need to rely on valuation if they are to get into the mortgage market in any substantial way.

The banks that were interviewed indicated a willingness to participate in educational opportunities in the valuation area. The Central Bank indicated that it would push to develop the valuation market and encourage its member banks to participate both with the professional society as well as in the educational trainings that could be brought to Rwanda.

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