Profile of Real Estate Sector in Burundi
Burundi’s real estate sector is still in its infancy stage following civil war disruptions that left the country in a mess, following the prevailing political stability in the country the real estate sector has started developing in urban areas of Burundi more especially in Bujumbura.
There are now residential areas built, some apartments, business premises as well as office blocks in Bujumbura
Characteristics Real Estate Sector
- The sector has upcoming apartments and residential houses
- Most of the residential houses have been put by individuals
- There is a lot of demand for housing units considering the return back home of refugees and high population in urban areas
- There is demand for mortgage financing by both local and middle class
- There are few players in the real estate sector.
- Business premises have been built in various areas around the city
- There is high demand for low cost housing units
Market for real estate sector in Burundi
As a result of increasing stability in Burundi, the demand for affordable, high quality housing is on the rise. Urbanization, the repatriation of refugees and the rise of a middle class lead to increased demand for housing units. However, the supply side of the housing market is not able to keep up with demand, leading to an annual shortage of 20,000 housing units.
The property markets in Burundi are still underdeveloped, with some activities like valuation contracted to real estate agencies in neighbouring countries such as Knight Frank Uganda Office lists valuation services in Burundi. No independent, local firms offer valuation services.
It is envisaged that government’s policy of encouraging local and foreign investors to invest in the housing sector will lead to the development of the property markets.
Providers of mortgage finance in Burundi
National Bank of Economic Development Burundi (BNDE), Fund for the Promotion of Urban Housing (FPHU), Burundi Bank of Commerce and Investment (BBCI), KCB Bank, Eco bank Burundi offer housing finance products, on a short, medium and long-term basis.
The housing loans include refinancing of mortgages, home building, home completion and home improvement.
Medium-term mortgages maturing in two to seven years account for 63 percent of the total stock of loans granted by the institutions while long-term mortgages for 15 to 20 years) account for 37 percent.
Challenges in providing mortgage finance in Burundi
- Lack of long-term funding schemes within the domestic banking system.
- Lack of a developed pensions and insurance industry which are crucial in resource mobilization and maturity transformation.
- Weak legal framework that does not foster the creation of a viable housing sector and mortgage market.
- Poor land tenure system as most of the land is undocumented and existing land records are outdated and also the procedure for land registration is cumbersome and inaccessible to the public.
Challenges in real estate sector
- High cost of funding
- Lack of adequate funding to the sector
- Lack of adequate well trained and experienced manpower to manage the sector
- Land disputes in some areas