研究生课程考核试卷

Course Examination Paper for Postgraduate

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科目(Subject)： Property Development and Finance

教师(Teacher)： Lv Yaxian

国籍(Country)： Rwanda

学号(Student Number)：2019MPA024709

姓名(Name)：TWIZERIMANA Evariste

论文题目(Title)：

上课时间 (Course Duration)： 15 weeks

考生成绩（Student Mark）：

卷面成绩 平时成绩 (Ordinary 课程综合成绩

(Paper Score) Score) (Final Score)
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研究生教育中心制
Postgraduate Education Center

PROPERTY APPRAISAL DETAILS - CONSTRUCTION OF

APARTEMENT HOUSES FOR RENT AND SALE IN KICUKIRO
DISTRICT, KIGALI, RWANDA

Contents
1.0 Executive Summary...................................................................................................................... 3
2.0 Introduction ................................................................................................................................. 4
3.0 Site and Location Analysis ............................................................................................................ 4
4.0 Market Analysis ........................................................................................................................... 5
5.0 Employment ................................................................................................................................ 5
6.0 Right selection of the site ............................................................................................................. 6
7.0 About monthly personal income .................................................................................................. 6
8.0 About the estimated cost and characteristics of affordable apartment. ....................................... 7
9.0 Profit analysis conditions ............................................................................................................. 9
10.0 Competition............................................................................................................................... 12
11.0 Project basic information, data and relative assumption ............................................................ 13
12.0 Residual Valuation ..................................................................................................................... 16
 13.0 Conclusion and Recommendation .............................................................................................. 23
14.0 References ................................................................................................................................. 24

1.0 Executive Summary

The government of Rwanda just passed housing development regulations and

funding schemes which aim at promoting access to affordable rental houses for the
low, middle and high income Kigali city populations. The existing studies on
housing for rental in this city did not yet discuss whether this government-supported
programme is likely to promote access to housing for these target beneficiaries. This
study applies the price-to-income ratio (PIR) approach and the 30-percent of
household income standard through the bank loan to assess whether housing units
developed in the framework of affordable rental housing schemes are, for the target
recipients, affordable at all. It relies predominantly on housing prices schemes held
by real estate developers, data on households’ incomes collected through the
household survey and a review of the existing studies and socio-economic censuses
reports. Findings reveal that the developed housing units are seriously and severely
high-priced for most of the target beneficiaries, especially the lowest-income urban
dwellers, due to the high costs of housing development, combined with the high
profits expected by real estate developers. The study suggests policy and practical
options for promoting inclusive urban (re)development and rental housing
affordability for various categories of Kigali city populations. These options include
upgrading the existing informal settlements, combined with their conversion into
shared apartments through the collaboration between property owners and real estate
developers, the development of affordable rental housing for the low-income
 tenants, tax exemption on construction materials, progressive housing ownership
through a rent-to-own approach, and incremental self-help housing development
using the low-cost local materials.

2.0 Introduction

Rwanda is a landlocked country found in East africa. It contain 26,338 square

kilometers and is dominated by highlands thus giving it the name “Land of a
Thousand Hills”. According to the 2018 Rwandan National Institute of Statistics
report (NISR), Rwanda has one of highest population density in Africa , the
population density is 498.66 people per square kilometer.This shows that the total
population in Rwanda was 12.1 million by then. This high popultion growth rate in
the country, has led to the increase of resource needs for public and private
infrastructure like residential building, apartment etc.

3.0 Site and Location Analysis

The proposed development will be located in Kicukiro district loacted within Kigali,
the capital city of Rwanda. KICUKIRO District is known by all because of the
presence of the Kigali International Airport. The presence of higher educational
Institutes, National university and private universities, international universities,
political centers, tell communication centers,sports centers,Administrative centers
and large Industrial zone support residential population in the district. Commercial
 markets in Kicukiro sector and along the airport corridor anchor Kicukiro District as
a commercial centre in the future.

4.0 Market Analysis

This district is located in the south-east city of Kigali, the capital of Rwanda. It is
made up to ten (10) administrative sectors, Kagarama, Niboye, Gatenga, Gikondo,
Gahanga, Kanombe, Nyarugunga, Kigarama, Masaka) , 41cells and 333
Administrative villages. It was established by Organic Law n°29/2005 organizing
the administrative entities of the Republic of Rwanda, at the start of the second phase
of decentralization in January 2006.
Kicukiro District ’s Population is estimated to be 2.3 million, with a 7% annual
growth rate till Year 2018 because the most peoples move from rules to urban for
seeking jobs, running various business. The district covers a total area of 166.7 km2
while about (81 ha) is the land site size . In fact, I selected Kicukiro district
especially Rebero cell as suitbale site for this project because of the many facilities
there such as transportation facilities, health services center facilities, markets
facilities,availability of water supply and electricty supply that will attract
customers.

5.0 Employment

A major driver of demand for renting apartments is the local workforce and
international workforce, because the positions available are normally those with get
high salaries and wages. While some inhabitants of kicukiro area commute to the
other part of the country for economic gains, there are still 1.6million people
 employed in about 1500 businesses in Kicukiro. The largest supplier of jobs in kigali
is the services industry,with total employment of about 8000 workers.

6.0 Right selection of the site

One of engineering challenges is the selection of a suitable building site, especially

for storied buildings. This is primarily dependent on the site soils characteristics, and
highly influences the housing cost.

In summary I have choosen this site as suitable building of apartment because the
price of land is not too expensive according to my purchasing power. And also the
types of soil are favorable to the construction of houses or apartment, weather
conditions also is so good because near of this construction site there are trees or
plants plantation which can provide oxygen.

7.0 About monthly personal income

1.Around 62% people living and working in kigali city particularly KICUKIRO,
including public and private servants have a monthly income varying from 200,000
up to737260.00 Rwf, where its great part (38%) earns more than or above 737260.00
Rwf. This can therefore be considered as the medium income group.

This is a very important factor that can push me to contruct apartement for renting
purpose at kicukiro district. Due to the many employees working from different jobs
and their purchasing power shows me that they can afford to pay my apartment price.
 2. Around 66% are able to pay for themselves an apartement from 20 to 30 millions
Rwf, with consideration of available suitable conditions for bank loans.

8.0 About the estimated cost and characteristics of affordable

apartment.

1. The medium income group, earning between 200,000rwf(209.42 $) and

737260.00RWF(772.00$) confirmed that the cost for an affordable apartment
unit should be between 20 and 25 millions RWF especially for selling .
2. For the majority of people living in Kigali (around 70%), the affordable house
(apartment) should have three bedrooms.
3. Each apartment is with 140 square meters built-in area, 3 bedrooms, 3
washrooms (toilets) a kitchen and storage, a sitting room and dining room.
Here are large parking spaces and a playground for your children….

The objectives are:

 To provide good quality affordable and private rent housing

 To contribute to the general fund through surpluses generated from housing
developed and rents received that can be re-invested in services to residents.
 To remain financially viable and operate efficiently to ensure it receives
sufficient rental income to meet all of its costs including financing, housing
management, property maintenance .

Market Size: Refers to the maximum total number of sales or customers of my

project can see, it’s helpful to know the potential market size before launching my
new products line that can help me to understand if it is a wothwhile investment of
my time and money. The construction houses or apartment for rent will includes
about 1,649.00 apartments

Table 1. Housing demand in Kigali city espcially KICUKIRO district

Housing Category Number of Unit Percentage

Social housing 436.00 12.62
Affordable housing 186.00 54.11

Mid-range housing 867.00 32.80

Premium housing 160.00 0.47

Total 1,649.00 100.00

Social housing: A housing typology that is affordable by households below the

poverty line,earning less than 209.4200 US dollars(200,000.00Rwf) per month.
Affordable housing: This is demand for households earning between 209.42 US
dollars(200,000.00Rwf) and 772.00 US dollars(737260.00) per month. This is the
largest segment of the housing market. These households have some payment
capacity and could access a special rental apartment which may include the rent-to-
own leasing mechanisms, etc.
Mid-range housing: Targets households whose incomes vary from 772.00 to
4110.00 US dollars(3925050.00) per month. Households whose income is less than
1320. 00 US dollars(1260600.00) can also buy these dwellings under the affordable
housing scheme and apply for the related bank loan, as stated in the current
affordable housing schemes. Others can use their income or apply for mortgage
financing to fund their houses.
 Premium housing: This addresses housing demand from the high-income group
whose monthly income is greater than 4110.00 US dollars (3925050.00) per month.

Housing Category Number of Unit Total cost Total

revenue
Social housing 436.00 62827.23$/Unit 719,567.12$
Affordablehousing 186.00 104712.04$/Unit 143,717,836$

Mid-range housing 867.00 157068.06$/Unit 463,883,370$

Premium housing 160.00 209424.08$/Unit 6580,110$

Total 1,649.00

9.0 Profit analysis conditions

Abnormal profit occurs when: TR > TC

Normal profit occurs when: TR = TC , here means no profit and loss in order words
the investment equal the returns
Loss occurs when: TR < TC

Market potential for Social housing:

M=nxqxp

Where the m is the total market potential, n is the number of buyers in the
specific market, q is the quantity purchased by average buyer and p is the price
of the average product.
 By estimation
N= 1.3M buyers
Q= 436.00 new houses
P= 209.4200 US dollars(200,000.00Rwf) per monthly
Then M= 1.3 x 3,436 x 209.42$ = 9354372.56x105

Market potential for Affordable housing:

M=nxqxp

Where the m is the total market potential, n is the number of buyers in the specific
market, q is the quantity purchased by average buyer and p is the price of the average
product.

By estimation
N= 1.3M buyers

Q=186.00 houses

P=772.00 US dollars(737260.00) per month.

Then M= 1.3 x 186.00 x 772$=1866696x105

Market potential for Mid-range housing:

M=nxqxp

Where the m is the total market potential, n is the number of buyers in the specific
market, q is the quantity purchased by average buyer and p is the price of the average
product.

By estimation
 N= 1.3M buyers

Q=867.00 Units

P=4110.00 US dollars(3925050.00) per month

Then M= 1.3 x 867 x 4110$=46323810x105

Market potential for Premium housing:

M=nxqxp

Where the m is the total market potential, n is the number of buyers in the specific
market, q is the quantity purchased by average buyer and p is the price of the average
product.

By estimation
N= 1.3M buyers

Q=160.00 Units

P= 4110.00 US dollars(3925050.00) per month

Them M=1.3 x160 x 4110$= 8548800x105

10.0 Competition

In a competitive rental market, most tenants have the opportunity to choose from
several different available properties, so setting an appropriate rent amount will help
fill the unit quickly and reduce vacancy costs.
Landlords need to remember that not all rental units are created equal. Just because
two homes have the same square footage and number of bedrooms and bathrooms,
does not mean they have the same desirability, which will greatly affect how much
rent can be charged. Other things to consider is about the location , the safety and
quality of your neighborhood and my renting apartment. You could own a beautiful,
updated rental property, but if it’s located in a dumpy looking neighborhood, it’s
unlikely you will succeed with a high rent.
The competitive market area (CMA), in which the majority of projects are expected
to compete with a given project, is generally defined through personal surveys of
competitive developments, interviews with local real estate professionals, and site
visits and evaluations. The CMA may vary within a project by product type for
example, a project’s housing or apartments product may compete across a different
area than the same project’s housing lots. The site has a wide array of planned
residential products.
11.0 Project basic information, data and relative assumption

Basic information and data

Land lacation: Kigali city, Kicukiro district
Land usage: Office,housing apartment and shop
Land area: 81ha
Largest construction area:13954m2 (Offices area is 7200m2, Housing apartment area
4650m2 , shop area is 2000m2, parking area 80m2 and 24 m2roof top parking area)
Assumption: By making investment in real estate market and collecting project
information, suppose the construction life span is 22months

Project schedule one

Construction life span 22months

1months 18months 3months

Planning period

Construction
contract

Void period

In 18months of constructing, investiment in development is classified into three

installements and first step imvestment it takes seven (7)months, next stage
investment takes eight(8)months while last investment stege takes three(30months.
 Construction life span 22months
1months 18months 3months

Planning period
10%

Construction
contract
60%

Void period 30%

Project Details for the Residual Valuation

Gross floor Construction Rent $ per m2 Yield %
space m2 Cost per m2
Offices 7200 1500$ 300$ 5%
Housing apartment 4650 1500$ 250$ 5%
10x100 m2 shops 2000 4000$ 200$ 5%

Additional informations

80 surface parking spaces, construction cost per sapace is 600$

24 roof parking spaces, construction cost per space is 2500$

Gross to net floor space adjustment for offices is 80%

Gross to netfloor space adjustment for shop and apartment is 90%

Professionals fees as a percentage of building costs is 12.5%

Demolition of existing building and site preparation costs is 250000$

Contigency fund at percentage of cost is 3%

Annual interest rate for the development is 10%

Interest to be charged on building costs for half the construction period.

Interest to be charged on professional fees at 2/3 of the construction period.

Interest to be charged on total costs for a 3months void period.

Letting fees assume joint agency, so the percentage of rental value is 13%

Advertising budget as a percentage of NDV is 1%

Developer requires a profit benchmarked against NDV is 15%

Financial institution’s costs of purchase benchmarked against GDV is 5%

Residual amount has to be discounted back to the beginning of development

period(18monts +4 mths)less purchase costs.
12.0 Residual Valuation

Gross Development Value

Offices, gross floor space m2= 7200

Net floor space at 80%= 5760

Annual rental value@300$ per m2= 1728000

Housing department gross floor space m2= 4650

Net floor space at 90% m2 = 4185

Annual rental value@250$ per m2= 1046250

10 shop units, gross floor space m2= 2000

Net floor space at 90% of gross= 1800

Annual rental value@200$= 360000

Total annual rental income $= 3134250

YP in perp@5%yield= 20

Gross Development Value (GDV)= 62685000

Net Development Value Less Purchaser’s Cost@5% of GDV= 59700000

Less cost

Building cost

Gross office space:7200m2 x $1500m2 = 10800000

Gross housing department space4650m2 x $1500m2= 6975000

Gross shop space 2000m2 x $4000m2= 8000000

80 parking spaces at 600$ each= 48000

24roof top parking spaces at 2500$ each= 60000

Demolition of existing housing apartment and site preparation cost= 250000$

Sub total of building costs= 26133000

Professional fees@12.5% of building costs= 3266625

Interest on building costs,1/2x18months@10%= 1936442

Interest on fees for 2/3 x 18monts@10%= 326663

Interest on total for void of 3months@10%= 763505

Sub total of fees and interest charges= 6293235

Contigency@3% of fees plus building costs= 972787

Letting fees at 13% of annual rental income= 407453

Advertising costs estimated at 1% of NDV= 597000

Development profit@15% of NDV= 8955000

Sub total of contigency, fees and profit= 10932210

Total costs= 43358445

Value of site in 22months = NDV- Total costs 16341555

PV of 1$ in 22months at 10% = 0.840

Value site now = 13726906

Site value allowing for acquisition costs @5% 13073244

Calculation of the Development profit

Expected net development value = 59700000$

Expected total costs

Building costs,fees and finance on total 34403475$

Land cost including acquisition costs 13726906$

Finance on land cost@10% over 22months 2615699$

Total= 50746080$

Residual profit 8953920$

Profit as a percentage of total cost= 8953920$ / 50746080$= 17.6%

Profit as a percentage of capital value 8953920$ / 59700000$ = 14.9%

So let suppose that the developer requires a 5% long term yield the calculation
would be this.

Expected annual income= $3134250

Expected total costs

Building costs,fees and finance on total 34403475$

Land cost including acquisition costs 13726906$

Finance on land cost@10% over 22months 2615699$

Total= 50746080$

Development yield= $3134250 / 50746080$= 6.2%

Then any return greater 5% could be a developers profit= 1.2%

Risk Analysis

Gross Development Value (GDV)= 62685000

Total cost (including finance) 43358445$

Land value 13726906$ or 19326555$

Suppose that the GDV and costs increase by the same rate

The GDV increase more than cost

The costs increase more than GDV

If value and cost increase in the same ratio, then land value willincrease the same
ratio.

GDV increases by 10% total costs by 5%

GDV 68953500
 Total cost (45526367)

Land value 23427133

70.6% or 21.2%

Then if development value increases by more than cost, it affect land value more
if the land value is small in ratio to the total value of the development.

GDV increases by 5% and total costs by 10%

GDV 65819250

Total costs (47694289)

Land value 18124961

32% or 6.2%

Discount cash flow method

Quarter $ Quarter $
1 1520204 5 4256571
Year1 2 2128285 10months 6 4560612
3 3040409 7 5168693
4 3648489 8 6080816
Period Net flow as above $ PV of $1@2.41% PV of cash flow

1 1520204 0.9765 1484479

2 2128285 0.9535 2029320

3 3040409 0.9310 2830621

4 3648489 0.9091 3316841

5 4256571 0.8877 3778558

6 4560612 0.8669 3953595

7 5168693 0.8465 4375299

8 6080816 0.9380 5703805

Total costs 27472518

Profit 1343250 0.9380 1259968

Value 8955000 0.9380 (8399790)

Site value today 20332696

Zoning/locations
 This is the sample pictures of apartement houses for rent and sale in kicukiro

13.0 Conclusion and Recommendation

According to the result analysis of this study shows that lowest income households
in kigali city not easy to afford these housing units because the result shows that
the housing prices is high so can be afforded by middle and high income group so,
I can recommend the government to decrease the housing cost through in setting
minimum of land price, taxation exemption on the imported construction materials
and to eradicate any restrictions and minimize the interest rate on construction
 loans while the government can provide any subsidize to the lower income’s
households by supporting them to be financed by financial institutions with low
interest rate to the loans without ang collateral security.

14.0 References

 Cloete, C.E. (1995). Property Investment (vol, 1). Sandton: South

African Property Education Trust.
 Cloete, C.E. (1998). Property Development, (vol, 1). Sandton: South
African National Property Education Committee.
 Echavarren, E. (2001). “Real Estate Project Review.” Corporate
Finance Quarterly Report Enero 2001. [Web page].
http://www.anderson/europe.com.
 Wurtzebach, C.H. Miles, M.E. and Cannon, S.E. (1995). Modern Real
Estate (5 th Edition). New York: Willey & Sons Publishers.