Draft proclamation on foreign property ownership sparks concerns over rising house prices

A newly proposed draft proclamation aimed at regulating foreign ownership and occupation of real estate has ignited concerns that housing prices could soar further, worsening an already strained housing market and making homeownership increasingly difficult for local residents.The draft law, titled “Proclamation to Regulate the Ownership and Holding of Immovable Property by Foreign Nationals,” seeks to establish a legal framework allowing foreigners to own housing or acquire land for construction in the country. The government argues that the measure is necessary to meet growing housing demand and attract foreign investment to revitalize the real estate sector.Ethiopia has experienced rapid urbanization, population growth, and increased foreign investment in recent years. These trends, coupled with rural-to-urban migration and changing lifestyles, have fueled a surge in housing demand. Studies estimate that between 2015 and 2025, approximately 471,000 new homes are needed annually to bridge the housing gap.Currently, up to 64% of urban residents live in informal settlements due to the mismatch between housing supply and demand. The real estate market is expanding rapidly, with the total value projected to reach 47.4 billion birr by 2024 and expected to grow at an annual rate of 9.85% through 2028, reaching nearly 70 billion birr. Residential real estate transactions alone are forecasted to account for 36.89 billion birr in 2024.Globally, countries vary widely in how they regulate foreign ownership of land and property—some have liberalized policies, while others maintain strict controls. Ethiopia’s draft proclamation aims to strike a balance: encouraging foreign capital inflows without compromising the land ownership rights of its citizens.Under the proposed law, foreign investors—defined as individuals or entities owning at least $150,000 in paid-up capital of an investment—would be eligible to purchase real estate after obtaining permits from the Ministry of Urban Development and Construction. The minimum investment for purchasing or lease-to-own property is set at $150,000, with limits on the number of properties a foreigner can own to be determined by subsequent guidelines.Proponents view the draft proclamation as a vital step toward stimulating economic growth, expanding modern housing developments, and improving infrastructure such as electricity, water, security, health, and education. The Ethiopian Investment Board supports the initiative as a means to build investor confidence and maintain a positive investment climate.However, critics warn that allowing increased foreign ownership could drive up housing prices, further limiting affordability for Ethiopian citizens. Housing advocates urge the government to carefully monitor market dynamics and implement safeguards to prevent negative impacts on local residents’ cost of living.The draft proclamation is currently under review, with stakeholders calling for broad consultations to address public concerns and ensure that the law balances investment attraction with social equity.