The New Times (Kigali)

2 February 2013

Rwanda: Rssb Should Seek Lasting Solution to Low Occupancy Rate of Its Office Blocks

editorial

As the custodian of workers pension funds, the real estate sector presents one of the highest returns on investment. The Rwanda Social Security Board's real estate projects spread across various parts of the country will definitely benefit the country in the long run.

In any case, such pension plazas, as they are dubbed, have set the bar in terms of construction of modern buildings, especially in rural areas. Secondly, these developments remain purposeful when demand is high. Besides, the developments have anchored the commercial sectors of most of the rural townships and solidified them as premier investment areas.

However, RSSB's investment in commercial buildings may be undermined by low demand due to a number of factors. One is due to cutthroat competition from individual investors who charge less for floor space and secondly due to high rental charges that may dissuade would-be tenants. Or perhaps, this could be as a result of short-term bubbles in the sector. Further still, such areas may not appeal to high end tenants.

According to reports, only 54 per cent of the Pension Plaza in Nyanza and Karongi districts is occupied. On the other hand, only 20 percent of the buildings in Rwamagana and Musanze districts is taken up.

This is a worrying trend that would have some effect on future investments. According to RSSB, the US$13 rent per square metre they charge for the pension plazas located upcountry is not much money. However, various district authorities and potential tenants demonstrate otherwise, pointing out that the said amount is to blame.

While marketing would be a strategy towards upping the occupancy rate, this is not guaranteed to attract tenants in droves. RSSB, hence, needs to devise other strategies to persuade tenants. These include lowering the current rental fee substantially in order to contend with competition, or as a last resort, selling some of the structures.

Otherwise, it is of nobody's interest to have unoccupied office space.

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