Raising initial deposit urged to stop bogus land bidding
Thirty seven land lease winners of the 24th round of the Addis Land Management Bureau auction failed to pay their down payment on time and as a result the Bureau will allow those who were placed second in the bidding to lease the land at the same price as the first bid.
According to the Addis Ababa Land Management Bureau’s regulations if the winner of the bid does not come in to sign their contract and make a down payment then the second place offer gets a chance to purchase the land but at the price offered by the first winner. If, after 10 days they do not sign a contract the land is sent back to a land bank and re-auctioned.
As in the case, Garden Real Estate, which offered 355,000 birr per square meter in America Gibe (Merkato) to purchase 1,380 square meters did not show up to put their money down and Alshemes Electro PLC who offered 352,333 birr for the same plot has been given the opportunity to lease the plot but at the price that Garden previously offered.
Of the six pieces of land offered in Addis Ketema Sub -City only three showed up to fulfill their agreement. Two of those who did not, included Muzumil Mahammed, who offered 273,397 birr for one square meter and Sunterra Real Estate who offered 311,500 birr for one square meter.
Only Entesar Ahmed in Ledata Sub-city, who offered 69,500 birr per square meter for 604 square meters, fulfilled his promise. Four other places which received offers of 30,332 birr, 51,050 birr, 86,000 birr and 61,200 birr per square meter respectively will be offered to the second place bidder as the winners did not show up.
Amazingly the two 809 square meter plots in Kirkos Sub-City which received bids of 101,500 and 48,221 birr respectively did receive a down payment from the bidders. The winning bidders fulfilled their agreement in all areas of Akakai.
Twenty five of the seventy areas of land sold off in the previous land auction also did not see their bidders show up to make a down payment. Three places in Nifas Silke Sub – City also were stood up at the altar.
In this auction a total of 117 plots were tabled for bid and 13 working days were given for the winners to fulfill their agreements. The city took the CPO (Cash Point Order) of the bid winners who did not show up. Currently the CPO is ten percent of the minimum total price of the land.
In the 23th round auction over 20 plots were directed to the land bank when the first and second winner failed to sign an agreement.
People who place high bids often are hoping to obtain a bank loan so when they are denied they are not able to come up with the down payment but often they are trying to prevent someone else from coming and snatching business from them in the area so they offer a very high price knowing full well that they have no intention of paying it simply to prevent a competitor from getting the land, Zewedu Lemma a lawyer in Addis Ababa, said.
Zewdu suggested that the city administration increase the CPO during the land lease auction tender.
“The CPO is very small so people are not afraid of offering a high price since they have little to lose. If the amount was higher people would not want to lose all that money and would be less likely to make bogus bids,” he said.