High rent drives traders out of Kigali malls, markets
One of the upcoming modern malls in Kigali city. Traders are moving out of the new, modern plazas citing high rent fees and lack of clients despite city authorities pushing them to operate in similar facilities. PHOTO | CYRIL NDEGEYA
IN SUMMARY
- has in recent years experienced a commercial property boom with modern malls and buildings replacing old, rickety houses.
- But the rate at which traders are vacating the new facilities over high rent is worrying.
- They say that while the new flashy malls such as Kigali City Market and Kigali City Tower in downtown Nyarugenge paint a picture of a fast-developing city, businesses can no longer afford the rent, which is triple the rates for the old premises.
The city has in recent years experienced a commercial property boom with modern malls and buildings replacing old, rickety houses. But the rate at which traders are vacating the new facilities over high rent is worrying.
The City of Kigali has been urging traders to pool resources and build highrise commercial plazas to replace the old commercial establishments from where they have been operating, but the plan could backfire as tenants in the new buildings say the rent is unbearably high.
They say that while the new flashy malls such as Kigali City Market and Kigali City Tower in downtown Nyarugenge paint a picture of a fast-developing city, businesses can no longer afford the rent, which is triple the rates for the old premises.
The Rwf27 billion Kigali City Market, located where the old Nyarugenge market stood, opened its doors to businesses in 2012 with a promise to offer small-scale traders who occupied the old facility better stalls.
However, businesses are vacating the once popular modern complex on grounds of high rent and tough restrictions from the owners, Kigali Investment Company, as well as the city authorities.
Mathilda Mukamwezi, 38, a trader operating from the ground floor, cited high rent and tax as driving the tenants out.
“We pay over Rwf100,000 a month per stall, which is high compared with other markets, where rent is about Rwf40,000,” Ms Mukamwezi said. “On top of that, we pay taxes; yet outside are vendors and other shops.”
She said most of the people who used to shop at the old market do not visit the new stalls since they think it is “for the rich.” She said: “It is a mentality; the complex scares them away.”
This argument is echoed by Diane Umukunzi, a wedding accessories dealer. She said some clients think that the goods sold there are too expensive while others do not like to climb stairs.
“On the top floors, businesses do not get clients as those on the lower floors,” said Ms Umukunzi, who operates from the fifth floor.
The two women concur that traders inflate prices to meet the high rent, pushing away prospective shoppers.
The top three floors of the six-storey mall, which housed bars, restaurants and beauty spas, are most affected by the flight of tenants, with the previous occupants having vacated for lack of clients.
A simple survey showed that there are more empty shops in the mega complex than those occupied.
Edmond Nkusi, who was running Liz Lounge & Bar Restaurant, which recently closed shop, said the cost of operating the business was not commensurate with the income.
“We came to do our business in the new market expecting to get more clients because there was more order but the situation didn’t really go as expected; instead, the number of clients dropped and we were requested to pay at least Rwf700,000 rent every month,” he said.
“Kigali city council stopped us from playing music yet it was key to attracting clients as they mostly came here to dance and take part in karaoke sessions.”
The establishment, along with two other similar businesses, would soon shut down.
However, Bruno Rangira, the director of communication at the City of Kigali, told Rwanda Today that the city council only asked to bar and restaurant owners in the malls not to compromise security.
“We did not prevent them from playing music; we recommended them to soundproof their premises as we had requested other nightclubs or pubs, since their sound interferes with other people,” he said. Efforts to get a comment from James Rudasingwa, the director of Kigali Investment Company, were futile as his known phone number was off.
The city has convinced traders operating in traditional markets to build modern malls, the most recent being Kabeza Market, after the old one was demolished. Kicukiro and Kimironko markets are expected to follow suit.
Also, construction of the Rwf60 billion Amarembo City Centre is set to kick off after the authorities encouraged traders in Quartier Commerciale in the city centre to build a modern mall between Rubangura, KCT and UTC buildings.
But while the new malls and markets are an exciting addition to Kigali’s growing picturesque skyline, experts warn that, with lack of planning, the malls could end up becoming mere “décor” in the city that is unaffordable to local businesses.
One of the examples cited as an oversight is the Gacinjiro Commercial Centre in Gasabo District, where furniture traders formerly operating in Gacinjiro formed co-operatives and moved outside the city, where they set up modern shopping malls.
The mega malls in Gisozi were supposed to be a one-stop centre for furniture and hardware but they are yet get tenants.
Attach properties
The co-operatives are now worried that banks will attach the properties.
“Traders fear coming this way because they think it is far from the city,” a member of Duhahirane Gisozi Co-operative told Rwanda Today.
The co-operative borrowed Rwf1.3 billion to construct the 184-room commercial facility. Several others, including Adarwa, which is made up of furniture dealers, also borrowed money from Rwanda Development Bank to build a mega mall.
Earlier this year, the traders approached the Minister of Trade and Commerce, who promised them that the government would provide the infrastructure needed to attract customers.
However, experts put the Gacinjiro problem to oversupply.
“The Gacinjiro case has been a time bomb waiting to happen,” said Charles Haba, a real estate dealer and property consultant. “Co-operatives invested in more buildings than was necessary, so oversupply was expected to occur.”
Though faulting most Rwandan property developers for investing before doing enough market research and forecasting, Mr Haba also accused financiers of not providing the necessary guidance to such investors.
He also partly blamed the lack of clients in malls and markets on poor design, saying some developers do not factor in the needs of prospective tenants and their clients.
