The con that became real estate

I tell you that you are the most fortunate creature in the city, if you own a roof over your head. You really are, as you won’t waste your time in search of houses every couple of months. You are so fortunate that you are privileged to have worries of only big things-how to pursue your interests and/or how to deliver something good for your society. I speak this as I have come to learn most residents of the capital are mostly worried whether the rent of the house they live in will increase or not, whether they are going to find a cheaper house or not, etc. There are those who also want to buy houses as constructing is almost insurmountable.

As Emergent Global Services explained it, ‘one of the most prominent trends in Ethiopia over the last decade has been the explosion of the Real Estate industry and its impact on the economy as a whole.  From residential estates to high rise office buildings, the sector has proliferated urban areas with new construction that together with the ever expanding transportation system, promises to completely transform the urban landscape forever in the next five years.  In fact, it would not be far from the truth to refer to the real estate market in Addis as one of the hottest in the world and indeed it is now more expensive to buy residential real estate here than in many other metropolitan areas of the world.’  
I bet no one would argue if I say that it is everybody’s wish for the sector to grow and be able to make everyone house owner.
However, the sector is sick. It would be a jack-pot if a real estate company deliver houses to its clients with a delay of only few months. Two, three or even five years delay is so common that it will not be considered as a delay.
It is well said than done for real estate developers to deliver houses to customers. Delay of not only months but years is a very normal thing these days.
Now and then, the real estate sector is being an agenda in the city. In 2010 the Addis Ababa city government reclaimed plots it leased to real estate developers saying that they violated laws and regulations.
I bet not all of those real estate developers are bad guys. We should leave a room to slightly think that these people might have tried every chance they came across to satisfy their customers, build their reputation, and contribute to their country’s development.
The players in the industry face with sizable and huge challenges, among others, lack of additional finance, lack of access to land, and lack of professionals.
“In truth at least some of these delays have little to do with any particular developer but are more related to the high rate of activity in the sector overall which puts a lot of pressure on building supplies such as cement, metal and other critical supplies.  However, a small number of newer entrants to the industry have begun to adopt pre-building approaches that they believe will not only yield more satisfied customers but healthier profit margins as well. Indeed almost all of them have attempted to help address another glaring issue in Ethiopia’s real estate sector which is the lack of substantive mortgage instruments from the finance sector to help homebuyers spread their purchases out over significant lengths of time. Finally, it must be noted that the process of buying a home in Addis is marked by a lack of good information outside of rumours, anecdotes and whatever your delala (freelance brokers) chooses to tell you.  Information about what prices similar homes sold for recently or are even currently listed at is not easily available at all and frequently results in poor decision making by buyers and sellers alike” according to Emergent Global Services report.
The government has ratified a proclamation which is said to favour clients. This proclamation is believed to resolve most of the issues between developers and their clients when dispute occurs.
The government is trying to make the middle-income-society house owners. However, it is quite obvious that the government alone will not alleviate the housing problem.
“Despite the difficulty of predicting where exactly the market will move, it may appear that some of the driving forces will apply downward pressure on the market. Does that mean you can expect housing prices to decline in the future? Don’t bet on it. Due to the aforementioned lack of sufficient mortgage mechanisms in Ethiopia, the vast majority of completed residential real estate is substantively paid up. Therefore the normative analysis that may have otherwise led to the conclusion of a mini bubble in the Addis housing market may not be valid at all. And the good news for developers is that there is an existing reservoir of need which should assure an almost bottomless pit of demand for their products in the foreseeable future albeit in different segments than the ones they mostly operate in now. In Addis Ababa estimates of housing needs range from 400,000 to 600,000 units across all segments.  If we were to attach an average value of just 100,000 ETB per unit, that would translate into aggregate unmet demand in excess of 50 Billion ETB.  Small wonder then that over 400 real estate companies are registered in the country all vying to claim their piece of that lucrative market.”

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