Dreams for low-cost housing shattered as cost of land soars
Thursday December 16 2021
Developers indicate land costs represent a big factor in property market. PHOTO | CYRIL NDEGEYA
Push for low-cost housing in the country's urban areas has suffered setback as prices of land continue to skyrocket.
The cost of land, which had risen by a significant margin in 2018 went up again in 2019 and 2020, according to the 2021 land reference prices gazetted on December 1. Developers indicate land cost is a major factor in home building, and the rise further complicates efforts to supply the market with estimated 31, 279 low-cost homes annually.
For instance, the Kacyiru sector of Gasabo District, where maximum land prices stood at Rwf96,114 per square metre in 2018, rose to between Rwf199,774 and Rwf204, 674. The minimum price per square metre ranges between Rwf47,417 and Rwf81,159 in most urban areas.
Kacyiru like Kimihurura and Remera emerged the sector with some of the highest land prices in Gasabo, alongside Muhima and Kiyovu in Nyarugenge District.
Minimum land cost in the areas range between Rwf47,000 and Rwf80,000 while the maximum is as high as Rwf204,000 to Rwf220,000 per square metre.
In Muhima, the cost of land per square metre rose from Rwf122,983 in 2018 to over Rwf220,000 this year.
Land reference prices suggest there has been a general increase of more than 20 percent on the minimum cost per square metre this year compared with 2018, in addition to over 30 per cent rise on the maximum rates in selected areas.
A standard plot of land of 300 square metres that cost Rwf28 million could now go for up to Rwf60 million and above in areas around the central business District.
Rubavu emerged among the secondary cities with the highest land prices at between Rwf10,000 – Rwf40,000 maximum per square metre to a maximum of Rwf85,000, followed by Musanze and Rusizi whose urban land cost range between Rwf2,000 and Rwf5,000, and a maximum of Rwf24,000 to Rwf50,000.
However, developers say the reference prices were not the only factors as market forces alongside speculation come into play in the ever rising land market prices.
“Those rates may not reflect the reality on ground as they are largely applicable during expropriation in public interest projects. There are so many factors that keep land costs varying.
For instance, proximity to key infrastructure amenities see plots and property fetch more than stated in the price reference,” argued Gilbert Irakiza, a Kigali-based property sales manager.
Mr Irakiza said depending on locations, land use changes in master plans for urban areas as well as general expansion of the paved road and transport networks all continued to drive the cost of plots up on a regular basis.
The Institute of Real Property Valuers (IRPV) said the current reference prices only reflect the prevailing market situation at the time of their estimation and are therefore valid for six months from the time they are published.
Besides, the institute says land reference prices only reflect the prices of land elements of the property without any development.
The minimum land cost per square metre range between Rwf17,368 to a maximum of Rwf36,746- Rwf42,169 per square metre in most areas of Bumbogo, Gikomero, Jabana, Jali, Kimironko, Kanyinya and Rusororo sectors of Gasabo.
In Gisozi the minimum cost per square metre rises to Rwf24,655 and Rwf49,621 while the maximum is Rwf113,674 in some areas.