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ALLAN OLINGO finds out what the signing of the East Africa Common Market Protocol means for real estate investors in East Africa

With a fully integrated economic community where goods, capital, labour and services will move freely across the borders, East Africa offers abundant potential, especially in terms of real estate opportunities.

Commercial buildings in Nairobi. The real estate industry in Kenya is still ahead of other countries in the region.

Even though the real estate industry in Kenya is a step ahead of other countries like Tanzanian, Uganda and Rwanda, the opening of borders has created new opportunities to invest in commmercial real estate such as office developments and industrial complexes as well as residential houses within this upcoming market.

In Tanzania for example, the real estate industry has for long been dormant and slow because of hostile government policies and regulations such as the Land Act, the Condominium and Mortgage Financing Acts, which now are being revised to create a favourable atmosphere for business.

Mwinyi Kalende of Property Lords East Africa, a Tanzanian real estate firm says that in the past, only few investors lingered in real estate because the market was limited. But today, more Tanzanians are shifting from the traditional housing to classy and modern housing styles.

“Currently, investments in office buildings form the bulk of real estate works in Tanzania and opportunities exist in industrial and residential building construction, especially with the free market within the East African Community,” says Kalende.

Vibrant economy

Dr Faisal Guhad, a project manager in Dar es Salaam points out that even though the Tanzanian market is picking up because of the change in policies, the real estate market is still slow, with many locals choosing to rent houses rather than purchase them.

Uganda, on the other hand, looks more promising. While certain towns in Uganda are still behind in terms of property and real estate investment, Kampala and Jinja have remained the prime investment towns because of their strong economies. And with the discovery of oil deposits, developers like Daniel Ojijo, the Chairman of Mentor Group, have already pitched camp in Kampala.

“I moved into Kampala because of its favourable market conditions and vibrant economy. Compared to Nairobi, Kampala has an effective local authority that is very responsive to investors,” adds Ojijo.

Ojijo says although property investment is good in Uganda, one should always consider the prevailing price and market conditions of the area they are targeting.

“If you want a good deal on real estate investment in Uganda, you should understand the current trends in home pricing and analyse the future market prospects of your property before taking steps towards real estate investment,” he adds.


One challenge the real estate investors face, especially in the Uganda and Tanzania markets, is the slow pace of returns on investments, especially noticeable because the Nairobi market has a higher appetite for the residential and office blocks.

“Most of the land in Tanzania is unviable for real estate investment because it is inaccessible. The poor infrastructure needs to be addressed to attract more real estate investors,” notes Guhad.

According to him, most of the land is not surveyed, making it difficult to determine its value for investment, especially for real estate development. The lack of standards in pricing in Tanzania is another obstacle to the development of the sub-sector.

“The government should ease the procedures of land acquisition and registration because the sector is growing,” says Guhad.

Njeri Cerere, CEO of the Kenya Property Developers Association notes that the story is different in Rwanda, as it currently is the best emerging real estate market.

“The development projects that are underway, as well as those that are being planned, have created opportunities for interested investors because of the massive government support,” she says.

Today, the largest market for investors in the real estate sector in Rwanda is in office block development because of the many business opportunities that the Rwandan government has created.

Market potentials

The opening up of the boarders has increased the mobility of people in the region, thus an increased demand of space for offices and homes for foreigners.

Business people and organisations across the region and far beyond are opening up schools, industries among others, and need the services of the property developers.

In Kigali, only five per cent of residents own modern-style houses, but the fast growth in population is creating a boom in demand for commercial and residential real estate development. The Rwandan government projects that by 2020, approximately 30 per cent of the population will live in urban areas.

In Kigali alone, the demand for housing averages 10,000 units per year. The combined demand for housing countrywide is estimated to be 25,000 units per annum.

On the other hand, the Tanzania Building Agency projected that last year�s demand of residential properties in Tanzania was estimated to be beyond three million units against a supply of 8,000 units per year of both high-end and middle class residential units. Nairobi�s demand stands at 350,000 against a supply of around 50,000.

In its annual report last year, Knight Frank estimated the yielding return on investments at nine per cent in Kampala as compared to Kenya�s seven per cent and Tanzania�s eight per cent.


After the signing of the East Africa Common Market Protocol in July last year, the East African Community has witnessed an accelerated growth in real estate more than most investors had anticipated.

“The demand is rising, and this makes financing easier to access. Various commercial banks are now willing to avail loans at affordable interest rates to developers as well as to property buyers,” says Ojijo.

Just recently, Centum Investment listed its shares on the Uganda Stock Exchange with its Chairman, James Mworia saying they had already committed $16 million (approximately Sh1.4 billion) for real estate investments in Uganda.

In February, Housing Finance signed a co-financing deal with East Africa Development Bank that was aimed at allowing the mortgage provider to handle larger real estate projects within the region.

“We are also eyeing co-financing deals with our main shareholders, Equity Bank and Shelter Afrique, as well as African Development Bank in a partnership that will help us finance the development of multi-billion projects,” said Housing Finance Managing Director, Frank Ireri.

Government support

The growing government support within the region has been particularly attractive to many developers.

Cerere says the real estate sector in Rwanda has witnessed a boom in construction activity not only because of the rising demand for housing, but also because of the conducive business environment.

According to analytical reports, business regulations are now easier in Rwanda than an average economy in Eastern Europe, Asia, Middle East, Latin America and Africa.

The country rose a record 76 places in a recent World Bank Global Survey as a friendly investment destination.

The Rwandan government has put in place measures to make the country conducive for investment. In 2009, four major commercial laws were passed in addition to administrative changes that make it easier to start a business, employ workers, register property, get credit and be protected as an investor.

“Following these changes, the building design approval process takes less than three days. This contrasts sharply with Kenya where property developers have for many years protested the unnecessary delays in the registration and approval processes,” says Njeri Cerere, CEO of the Kenya Property Developers Association.