The Ethiopian real estate market ended 2023 in a down note. The first few months of 2024 offered no respite as many of the same negative factors at the end of 2023 continued to persist including lack of finance, exuberant taxes, and skyrocketing cost of construction materials. However, there might be some light at the end of the tunnel.
On March 23, 2024 the PM of Ethiopia, Dr. Abiy Ahmed met with a group of large tax paying business owners. During his talk, he gave some assurance that many policy changes are in the works that would improve the economy in general and the real estate market in particular.
Among the upcoming policy changes announced include allowing foreigners to buy and own real properties, opening up the retail sector to foreign investors and substantial change to the banking sector. He also addressed the reason why we are seeing so much demolition happening in the city. According to him, this is required to build proper infrastructure and rebuild the city in a modern way. It is to be recalled that many of the city residents showed their opposition to the demolitions claiming that it was done without due regard to the historical heritage of the city, and without adequate warning to the residents that would be displaced.
The most significant revelation in as far as real estate is concerned is the policy that would allow foreigners to purchase real estate. In the past only qualified investors were allowed to purchase a home. Many of these policy changes are motivated by the desire to get foreign direct investment into the country.
Details such as whether foreigners have to pay in foreign currency or if they can acquire any type of property has not been disclosed. Many countries put restrictions such as foreigners can only buy newly built homes from real estate companies.
We believe that this new policy is a welcome news for the real estate sector, however a solid recovery is not going to happen for as long as financing remains restricted, and the taxation issue is not revisited. All this is off course in addition to the security challenges the country is currently facing, which to some is the most important issue.
Editor