Performance, Challenges, and Prospects of Real Estate Financing in Addis Ababa

Abstract

Most houses in Ethiopia are built of mud or mortar and have thatched or tin roofs.. As of the mid-1980s, over two-thirds of all housing units were constructed of wood and mud, and only a lesser number of them were built of wood and thatch. Housing shortages and overcrowding are still major concerns, accounting for 89% of the population in the country is living in substandard housing. Homelessness is a big problem in urban areas; it has been estimated that 80% of the residents in Addis Ababa are homeless or reside in substandard housing. Since the onset of market oriented economy, real estate development has been encouraging as the private and foreign investors involved along with the government investment in the sector. However, there are daunting challenges. In particular, the problems of land management, low construction capacity, inadequate infrastructure, poor borrowing capacity, prices escalation, low affordability are worth mentioning. Hence, the government has to lay dawn a fertile ground and enabling real estate policy by intersecting the interests of private and financial sectors in wise way, keeping the aggregate economy from unprecedented disturbance due to extensive investment and over building.

Keywords: Real Estate, Price Escalation, Condominium, Project cost, Affordability