Why is Real Estate in Ethiopia so Expensive?
Ethiopia's real estate industry is still in its early stages, but it is expanding quickly. There is a high demand for housing in the nation, and the government is making investments in infrastructure development to bolster economic expansion In the real estate industry, this has led to a multitude of options for investors.
Ethiopia's real estate market has been expanding in recent years, with prices rising quickly. There are several variables that are causing this, such as:
1.???? Population Growth: Ethiopia's population is expanding quickly, which is driving up demand for more homes.
2.???? Economic Expansion: Ethiopia's economy is expanding quickly, which is driving up demand for commercial property.
3.???? Foreign Investment: Investing in Ethiopian real estate is becoming more and more appealing to international investors.
4.???? Government Policies: A variety of measures put in place by the Ethiopian government have made it more challenging to construct new homes, which has also raised the price of real estate.
Population Growth:
The shortage of housing in Ethiopia is a result of the country's fast population growth. The population of the nation is predicted to increase from 110 million in 2020 to 150 million by 2050.
Economic Expansion:
In recent years, Ethiopia's economy has been affected by rising inflation. In 2022, the annual rate of inflation was 27.6%, and in 2023, it is anticipated to stay high. The rising cost of real estate is partly due to this inflation.
Foreign Investment:
Ethiopian real estate has seen an increase in foreign investment in recent years. Many causes have contributed to this, such as: Ethiopia’s growing economy, strategic location, low-cost labor force are among few reason for growing interest among foreign investors.
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Government Policies:
Several measures enacted by the Ethiopian government have complicated the process of constructing new homes. Among these policies are:-
Expropriation of land: In order to construct new infrastructure, the Ethiopian government has taken land away from farmers and other landowners. Because of this, it is now more challenging for developers to find land for new residential developments.
Building regulations: The Ethiopian government has implemented strict building regulations that make it more difficult and expensive to build new housing
Taxes: The Ethiopian government levies substantial taxes on transactions involving real estate. Real estate purchases and sales are becoming more costly as a result of this.
To sum up There are no simple answers to Ethiopia's high real estate costs; it's a complicated problem. For the foreseeable future, the causes that lead to the high cost of real estate are probably going to persist, which implies that the high cost of real estate will probably continue to be an issue.
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Addis Ababa, Ethiopia (4th Dec 2023)