The Addis Ababa real estate market in the year 2023 experienced a classic boom-bust cycle. It started with a hopeful tone right after the war in the north came to an end with a peace deal. This led to a gradual recovery of the market through the January to May period. Things started heating up around June/July when prices escalated, hitting a crescendo in August/September before falling off a cliff in the October to December period.
The rapid price increase experienced in the first half of the year is not surprising given there was a post war pent-up demand fueled by the diaspora who were hopeful that the country can now focus on economic development. The persistent speculation of an imminent devaluation of the Birr also contributed to the rise. It seemed no one wanted to be caught holding any significant amount of Birr, so tone of money was being parked in real estate. The mania was further fueled by the announcement of the Addis Ababa city government that someone bid an astounding 695,000 Bir per square meter for a plot in Sar Bet. This led to an immediate repricing of private plots throughout the city. Prices in posh locations such as Bole and Sar Bet skyrocketed. Some apartments were selling 250,000 to 300,000 Birr square meter.
The rapid price increase seemingly encouraged many developers who were on the sidelines to jump-in and started construction. Over the next several months we saw many real estate companies announce new construction, especially those companies who were granted plots from the government. Among the big players in this space is Ovid Real Estate that announced several projects throughout the city with extremely enticing prices. They were advertising a price of 110,000 Birr per square meter for their Bole Medehanialem project. The increased supply combined with the lack of bank loans for real estate chocked the market of liquidity with immediate effect and prices re-adjusted. In our estimation prices at the end of December were roughly 20% lower than they were in the June-August period.
In addition to the market volatility, 2023 is also remembered as the year where many policy changes were implemented which dismayed property owners, big and small. The government revised the way it calculates the wall and roof tax, increasing it by factor of as much as 50 folds compared to what it was for decades. They also increased the title deed transfer tax and announced their intention to introduce yet another tax called property tax.
Looking into 2024, what can we expect? That will be the subject of our next blog. Follow us at http://www.ethiorealestate.com.
Good review!
2023 was a disastrous year for the real estate market in Ethiopia.
The government seems to have one clear agenda: to completely destroy the real estate market in the country, especially in Addis Ababa.
Taxes on top of taxes, no mortgages allowed. They introduced new taxes, increased the old taxes by as much as 800%.
The people in charge hate Addis Ababans who own 500 square meter or more plots in the city. The OLF team in charge of the country want to take over Addis, and make it part of “The Great Oromia” and are trying their best to drive non-Oromos out of the city.
Sleepy Addis Ababans are just clueless with what is happening around them. Wake up Addis Ababans.
The mayor and her team are corrupt to their core. Believe me they will all be driven out of office and the general public will find out about their corruption.
The previous mayor @TakeleUma and his corrupt friends own several buildings in the city. One of the buildings this man owns is located near Effoy Pizza at Bole Atlas.
Wake up Addis and smell the rotten coffee!