The study revealed that 46 per cent of residences in Kampala are for renting, as are 47 and 78 per cent respectively in Dakar and Abidjan.
Dar es Salaam. The high costs associated with building a house are forcing Dar es Salaam residents to seek rented premises, a new study says.
The study, conducted by the Centre for Affordable Housing Finance in Africa (CAHF), established that 55 per cent of the residential houses in Dar es Salam are for rent.
CAHF conducted the study in 2017, focusing primarily on four cities, namely Dar es Salaam, Kampala (Uganda), Dakar (Senegal) and Abidjan (Cote d’Ivoire).
The study revealed that 46 per cent of residences in Kampala are for renting, as are 47 and 78 per cent respectively in Dakar and Abidjan.
“In every ten residential houses in Dar es Salaam, almost six are for renting,” the study found.
Until October 2017, CAHF says, Dar es Salaam had over 590,000 renting households.
The lowest amount that one needs to build a modest 55-square-metre house in the commercial district is $26,750 (about Sh60 million) – far too high for many city residents.
On the contrary, one needs about $18 (Sh41,094) as monthly rental for a single room, the study reveals, arguing that this is what makes the average Tanzanian to rent instead of build a home.
Yet, a surprising number of tenants still struggle to pay rent.
“Data show that 27 per cent of renting households in Tanzania don’t have enough money to pay rent, as they grapple with other basic needs,” the study says.
The CAHF findings concur with those of a 2015 Cost of Living Index study by Numbeo – the world’s largest database of user-contributed data about cities and countries – which stated that Dar es Salaam residents spend the largest chunk of their earnings on house rent than on any other basic needs.
Some 34.1 per cent of earnings are spent on rent, leaving 65.9 per cent to cater for other needs, including food, clothing, transport, water and electricity. For Nairobi and Kampala, rental accounts for 23.7 and 13 per cent respectively of residents’ monthly bills, leaving them with enough cash for other needs.
Experts put Dar es Salaam’s annual return on investment in the real estate at 24 per cent. So, if you invest $10 million (Sh22 billion) in a rental facility in Dar, you earn Sh5.2 billion yearly if the building is fully occupied, thus recouping your investment in less than five years.
The UK-based Global Property Guide (GPG) – a researcher that sells data to investors in residential property – says rental yields are higher in Tanzania than in Kenya.
To put this in perspective: property developers in Tanzania take an average of five years to recoup their investments in real estate.
So, according to the GPG, Tanzanians yearning for home ownership can only realise their dream if they are ready to pay 134 times their annual incomes.
