In a previous post ( we reported that, according to the press, Dar es Salaam and Nairobi offer more attractive investment opportunities than Kigali. That opinion was based on the fact that it is cheaper to develop real estate in Dar and Nairobi than it is in Kigali.

That’s one way to look at thing: if the price of constructing is low, you have a great profit margin, and, therefore, huge returns. The problem of this line of thinking is that real estate generates returns only when it is sold. No matter how cheap construction is, if you fail to sell the real estate you developed, you do not make any returns.

Hence, the question is: is the real estate market in Dar and Nairobi as dynamic as, or even more dynamic, that it is in Kigali? This is a question for which, perspective investors, should seek an answer.

If they build now in a city where thousands of newly finished apartments are empty, where landlords are struggling to lease their properties (apartments, shops,…), where small businesses are closing down, where rent prices are dropping because an oversupplied real estate market is experiencing a drop in demand, will they make a good return on their investments?

Probably not.

So, instead of just looking at how cheap it is to build, investors should also consider how realistic it is to sell at the right price and our impression is that Kigali (and possibly Nairobi) offer more attractive investment opportunities than Dar es Salaam.