NHC proposes six important measures for real estate sector

NHC Morocco Square apartments. Six recommendations made by NHC have the potential to drastically after the nation's real estate market. PHOTO | FILE

What you need to know:

  • NHC is implementing a number of projects including a Sh137 billion 'Morocco Square' and Kawe 711 whose value stands at Sh105.1 billion.

Dar es Salaam. The National Housing Corporation (NHC) is proposing six measures that if implemented will change the face of the real estate sector in the country.

The measures include tax relief on construction equipment, Value Added Tax (Vat) exemption on a house sold at below Sh100 million and establishment of a special revolving fund to serve as housing subsidies to make the costs affordable.

The list of measures also include availability of cheap land and technology designed to make the cost of housing affordable, and water, power and road authorities to put in place infrastructure at the construction areas.

NHC is also recommending the government to scrape off all obstacles hindering Tanzania diaspora and foreigners from purchasing and investing in the real estate sector.

“We commend the government’s efforts in bringing about the revolution in the real estate sector. We are having more engagements with it (government) to enhance the sector’s prosperity,” NHC director general Hamad Abdallah told members of the media yesterday here in the city.

He poured praises on the government for its decision to remove the Vat on sales of a house whose price is below Sh50 million.

However, he said, if the Vat exemption is extended to houses sold at below Sh100 million, it will attract more buyers.

Mr Abdallah said since its inception in 1962, NHC has constructed about 24,000 units.

Countrywide, he said, demand for houses stands at 300,000 units per year.

However, supply is less than 50 percent.

That is why the government has opened doors for the private sector to partner with NHC in implementing some projects so that they could build more houses.

So far, he said, the NHC board of directors had approved 24 projects worth Sh340 billion to be implemented in partnership with the private sector.

He said currently, the government was preparing contracts for partnership.

“Demand for houses is very high. We need to come up with measures that will make them more affordable so that we can reach more Tanzanians,” said Mr Abdallah.

NHC housing sales jumped by 315.8 percent in the 2021/22 financial year compared to the preceding year.

Under the period of review, sales jumped from Sh29.33 billion to Sh121.95 billion.

As a result, the company’s net profit climbed from Sh31.7 billion to Sh60.7 billion.

The NHC's increase in sales and eventually profit was triggered by the population increase in towns, increase in people's income and bank’s provision of more loans to individuals, according to Mr Abdallah. 

“Those who think our projects are white elephants are wrong. Our investments are economically viable,” said the NHC boss.

Currently, he said NHC was implementing the Samia Housing Scheme that involves the construction of 5,000 houses.

“As I speak, the project is 40 percent complete and already we have sold 85 percent of houses,” said Mr Abdallah.

He said the project was expected to be completed in January next year.

On the call for cheap land, he called for the government to cut prices or give them for free so that they could build affordable houses.

“You know, if we build houses at high costs, it is the final consumer who will bear the burden and that is why we are looking at ways to lower our operational costs,” said Mr Abdallah.

NHC is implementing a number of projects including a Sh137 billion 'Morocco Square' and Kawe 711 whose value stands at Sh105.1 billion.

One of the most prominent real estate projects at the Morocco intersection in Dar es Salaam, dubbed 'Morocco Square' was once considered a white elephant after the project stalled for several years under the previous regime.

But that is now a thing of the past as the project, which was revived in 2022 under the current leadership of President Samia Suluhu Hassan, is 97 percent complete, according to Mr Abdallah.

NHC also says that 94 percent of the mall and retail shops have already been leased, with the 81-room hotel also being bought by an Indian company that will operate it.

On how the government will recoup its money back, NHC said they will be collecting not less than Sh850 million per month from tenants.

Looking at a broader picture, he said they were improving the means to collect their rents efficiently to do away with debts owed by tenants.

Currently, he said, NHC tenants are owed a total of Sh23.8 billion.

In wider efforts to collect the debts, he urged chronic debtors to pay their debts, or else, they will find their names in the media.

This will eventually find themselves at the risk of losing qualifications for getting loans from any financial institution.

Again, he said, they had signed a contract with the Credit Information Bureau whose job is to collect and research individual credit information.

For new tenants, he said, they will be required to have a security deposit which is equivalent to the three-month rent.

NHC to go public

NHC said it was in the process of issuing the ‘Nyumbani bond’ and it will be ready within this financial year.

“Currently we are in the process of procuring a lead arranger to facilitate issuance of the bond,” said Mr Abdallah.