Land bubble continues as Merkato sees another massive bid

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Addis Ketema sub-city (America Gibe)

As expected a staggering 355,500 birr was offered by Garden Real Estate for 1,380 square meters of land located in Addis Ketema sub-city Woreda 1, Merkato commonly known as America Gibe. The total price for the plot is about 491 million birr.

The second highest bidder for this plot offers 352,333 birr.

Another 311,500 birr was also offered in the same compound for 1,388 square meters of land.  In the six areas of Addis Ketema sub city auctioned off the lowest price offered was 150,000 birr per square meter, offered by Alemu Nega for 376 square meters of land.

Most of the places offered in the 24th round land lease auction are business centers. Two places around Kirkos sub city and five places in Lideta sub city received bids of 75,000 birr up to 95,000 birr. Kolfe, Nifias Silk and Akaki sub cities auctioned off 70, 14 and 20 plots respectively.

The winner of the bid should appear in 10 days and pay a 20 percent down payment. If they don’t show up the city will award the second highest bidder.

Last year 355,555 birr was offered for one square meter of land by Siket International PLC in the 15th round of land lease auction. The price offer was made for a plot of 240 square meters of land located at the main trade center in Merkato behind Yirga Haile Commercial Center.

Land experts commented that the rising land lease price in the city illustrates the failure of the legal framework as well as the land management system in the country. The maximum price of a square meter of land has skyrocketed from 2,000 birr in 2008/09 to 26,202 birr in 2012/13 and 31,850 birr in 2013/14.

In addition to the sky-rocketing lease price offered by auctioneers, the prices charged by the administration follow neither the floor price nor the grades of the plots.

Despite the availability of vast land resources a little more than 1.5 million square meter of land has been transferred through auction since the ratification of the new urban lease proclamation in 2011.