Real estate

The real estate sector has been one of the fastest growing segments of the
Ethiopian economy. The residential real estate market in Addis Ababa is
evolving into a varied mix of extensive government-built condominiums
(seemingly for lower-income groups), mid-market developments by housing
cooperatives, and largely high-end homes built by real estate developers
and/or homeowners themselves.

The rapidly changing real estate landscape in Addis Ababa is one of the more
visible aspects of the extended period of growth recently experienced in
Ethiopia. From large residential developments sprouting at the city outskirts
to rising new office complexes and government-built condominiums being
constructed in center city locations.

Both challenges and opportunities are encountered on Ethiopian real estate

business.

 key obstacles/threats/ facing the sector include

o Change in government regulations on such matters as
land policies, ownership transfer, etc…
o the scarcity and cost of construction material,
o Provision of utility
o Rising inflation - incapacitate consumer to purchase fixed
assets. Inflation is the downfall of the purchasing power
of money. One benefit of investing in real estate is a
hedge against inflation
 With respect to the opportunities,
o Ever increasing in price of various type of house especially
here in the metropolitan. Appreciation leads to an increase
in the value of an asset. In Ethiopia context appreciation of
asset value of building often guaranteed.

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 o Government support through its regulation and incentive
schemes to the sector in an effort to reduce the housing
shortage
o The government is investing on Roads, Telephone and the
energy sector which indirectly help to facilitate the
development of real estate industry
o there is much promise in four particular sub-segments of
the real estate market:
 city-centre commercial developments;
 residential developments/including apartments/
focused on middle income groups;
 new developments based cheaper construction
materials
 commercial parking developments

Type of Real-Estate

Residential real estate aims to meet the needs of homeowners and families.
Residential real estate involves property for sale in Ethiopia for private use,
usually to give Ethiopian homes for families. Families come in all shapes and
sizes, as do householders.

 SINGLE FAMILY REAL ESTATE:- A single-family home is a

standalone house created for one family. Single-family homes give
more privacy and space than other types of homes. This type of
home is the most common Ethiopia.
 MULTI-FAMILY REAL ESTATE: - A multi-family home is a structure
consisting of more than one collection of living spaces with
separate entrances. Multi-family houses are the least common
type of residential buildings in Ethiopia.
 CONDOMINIUMS:- Condominiums are multiple dwellings in a
building or group of buildings on the same plot that share a

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 common area for every resident. Ethiopia is known for building
condominiums by the government which is now home.
 APARTMENT FLAT :- An apartment is a set of rooms for residing
in a private house in a building or which is normally divided into
several separate dwellings on one floor of a large building.
 VILLA HOUSE:- Villa houses are a common type of buildings that
can be single-story or multi-story. And, it is a mixed wall around
the house.

Market
The market demand for real estate is being derived by the following major
factors

 Rise in income:- As income rises, (due to the fast growing

economies witnessed worldwide on developing countries) a
greater share of income would be allocated for purchase of
home and related matters
 Demand arising from Diaspora:- Several Ethiopian
Diasporas are living in North America, Middle East, Europe
and other areas… Diaspora with different income level has
great intention to purchase various type of House here in
Ethiopia for the purpose of residing while returning back
home, or for speculative purpose etc… hence there is
untapped demand for the products as they have much
capacity to purchase real estate homes as compare to local
communities

 Financial institution support:- in pursuit of enhancing the

real estate industry, financial institution in collaboration with
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 city Administration is implementing strategic aiming to
alleviate house shortage surfaced nationwide. Thus, financial
intuitions, both private and state commercial banks, in
pursuit of getting resources are supporting those customers
who wish to participate in real estate business etc

 Demand and supply Gap: Existence of wide gap for

demand and supply for house in the city. This has vividly
driving up the price of house in Addis Ababa. Sale prices for
even modest homes exceed Birr 2 million in many of Addis
Ababa’s residential areas, while average sale prices for large
homes (with 1000 square meters and four-or-more
bedrooms) are now routinely above Birr 10 million in the
most expensive areas. In these same high-end areas, rental
rates are in the range of Birr 30,000–40,000 per month for
large homes. From a cross-country perspective, home prices
and rents are beginning to match or exceed the levels seen
in African countries with much higher incomes than Ethiopia

 Other important factors : such as increase in

urbanization, the relative preference of citizen to own house
in urban areas, the preference of people to hold wealth in the
form of fixed properties specially holding house to hedge
against the rise of inflation and the resulting loss of
purchasing power of money etc… The market price for house
in urban areas especially in Addis Abba bubbling up and
change in prices often observed frequently on monthly,
quarterly. This has initialed most of real estate developer to
participate in the real estate market. The real estate

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Characteristics of real estate business in Ethiopia

 The price of real estate/Sales or rental/ vary depending the area

where the real estate is going to be constructed. Its obvious that
market for real estate products in such area as Bole, CMC, Bole
Bulbula, Bethel, Bisrate Gebreiel ….is much higher as compared to
such area as Gulele, shiro meda, kality, kolfe etc…Accordingly, the
implicit/locational/value of the land in this area is much higher due
the relative betterment of some amenities, relative growth of
infrastructure of the surrounding, etc…
 Role of brokers and sales agent:- Brokers (formal and informal) are
the most influential and driving force for dramatic change in the
price of real estate products
 The need to have a luxurious life coupled with the rise In income
also led to the rise in demand for real estate products
 Financial institution are providing long term loans to finance their
staff as well as for staff of other companies such as NGOs, to
acquire various residential building or apartment units has
increased interest to hold asset
 Major release estate developers, Ayat Real estate, Noh, Flintstone
homes, Gift, Eniy etc… are currently participating in real estate
business aggressively despite that these companies severely
challenged by the rise in cost of construction material cost etc…

Requirement to get land from the city government land

administration biro

 Licensing/investment or trade license/

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 o Previously a businessman interested to participate in real
estate need to obtain Certificate of Registration of Real
Estate from Ministry of Urban and Development and
Construction
 If legal status of the real-estate promoter is PLC then
o Statues or memorandum and articles of association of the
company.
o Full address of the registered or principal office of the
company.
 TIN
 BOQ
 Bank statement to ascertain the capacity to commence
construction
 Feasibility study
o Market status of the real estate business.
 Price of real-estate apartment in the vicinity
o Management of real estate
o Technical aspect
 Acquiring Land
 Location of the real estate
 Availability of utility
 Infrastructure
 Cost of construction

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