A staggering 355,555 birr is offered for one square meter of land by Siket International PLC in the 15th round of the Addis Ababa land lease auction. The price offer is made for a plot of 240 square meter land located at the main trade center in Merkato behind Yirga Haile Commercial Center.
Siket will pay a total sum of 85.3 million birr to the Addis Ababa Land Management Bureau.
In another auction ATAA Construction PLC won the 449 square meters plot located at Berbere Terra in Mercato offering 286,500 birr for one square meter. This plot of land was auctioned during the 11th round auctioning where Zeway Trading Plc had won the auction with an offer of 305,000 birr per square meter, but the company withdrew its offer after raging criticism. The floor price for this particular plot was 1,323 birr. The second highest offer for the plot was 280,000 birr.
The building that can be constructed in this area is a G+8 storey building, according to the construction standard, that will be used for commercial purpose.
Zemedeneh Negatu Managing Partner and Head of Transaction Advisory Services at Ernst & Young (Ethiopia) PLC told capital “I am assuming the buyer has a strategic business reason for paying Birr 85 million (USD 4.1 million) for what appears to be very small plot of land. Maybe the land is adjacent to his existing property and he needs it for expansion to build a large mall or shopping complex? Therefore, without knowing the context for why he bid for the land, it will be difficult for me to provide you an analytical response of the value proposition of paying 85 million for 240 square meter.”
“However, in absolute terms, comparing the Merkato land price to some other major global cities, it appears to be very high. For instance, on New York’s Fifth Avenue, which is one of the most expensive areas in one of the most expensive cities in the world, a plot of land was recently sold for about USD 9,800/square meter. Therefore, the USD 17,000/square meter in Merkato is almost double New York’s price” he added.
In the latest round of auction 154 plots located in different parts of the city were put on auction. Fifty four were located in Akaki kalitti, 44 in Bole, 4 in Adiss Ketema and the rest are found in Kolfe Keranio sub–city. Most of these plots were sold out for a price of 10,000 up to 15,000 birr per square meter.
The auction of two plots of land situated in front of Lafto Mall, which measure 2,100 and 1,800 square meter respectively, were cancelled due to unknown reasons.
The Addis Ababa City Administration that had been criticized harshly for bidding land with such high price had said that it will provide more land to bring down the price.
In the 2014/15 fiscal year, the city administration sold 58 hectare of land in lease auction which brought in 639 million birrn