My thoughts on Ethiopias current Real Estate market. __________________________________________ The housing price in Ethiopia has soared to the roof. As a matter of fact, we are witnessing the biggest escalation of prices that we have ever seen in the history of Ethiopia. Is this a sign of future growth and transformation or just another bubble waiting burst ? For the past 5 to 7 years I, just like as many other Ethiopians, have been looking into exercising the idea of acquiring a residential property in Ethiopia. My search for a viable and fair property price was met by utterly absurd and ridiculous figures. Just to mention few, I saw various G+1 houses, with 3 to 2 BDs, 1.5 Washrooms ,with total area ranging from 400 to 1500 m² which are located in Olompia, CMC , megenagna, Bole, and also, including other areas within Addis Ababa vicinity. The average asking price was 8,000,000 Bir. Needless to mention, many of these new and old specious villa houses go even up to 8 to 21 Million Bir. Let us do a simple deductive reasoning by way of examining whether or not the intent of investing that much of money is morally and ethically logical and rewarding from profitability stand point. Now, If we go ahead and arbitrarily take the figure 7,000,000 bir , which is even less than the average asking price 8,000,000 bir (just for the sake of this example) then, today Thursday, Nov 06,2014, according to googles currency exchange rate, this figure would equate to exactly $348,944 US dollar. Mind you - $349k US dollar can buy, not one, but two or even three specious foreclosure villa houses located in one of the most renowned states like Miami, FLORIDA, Las Vegas, NEVADA, Cleveland, OHIO. Moreover, from firsthand knowledge and encounter, I can firmly attest that one can be fully guaranteed to buy four even five foreclosure houses with $349k in a state where there is a high rate of vacant foreclosure houses like -- Birmingham-Hoover, Ala., Kansas City, Mo.-Kan., Portland-Vancouver-Beaverton, Ore.-Wash., Wichita, Kan., , St. Louis, Mo.-Ill. , Michigan. On the flip side, I reckon that real estate builders and agents (ደላላዎች) in Ethiopia are in a rush to increasing the real estate price sky high as if they are playing a game called Catch us if you can. As a result, housing price is soaring extremely high specially in and around the outskirts of Addis Ababa and according to peoples account and testimonials - just in recent years alone - the real estate price in Ethiopia has jumped to a staggering and unbearable level. In contrast, one can deem to attest the fact that the continual increase in real estate prices in Ethiopia is due to a high demand - and that the demand is driven by a fast growing middle class that can afford to purchase these new and old properties by paying CASH up front. Really ...Really ..are you serious ??? The exponential rise in residential and commercial real estate price, without a shadow of a doubt, is a result of an intimately linked and motivated by premeditated speculation and irrepressible corruption. Ethiopias residential real estate market has been over evaluated under a false pretense that there exist a massive demand for a residential and commercial property which neglect the staggering gap which exist between the rich and the ever increasing poor majority. This does not seem to worry the government because, the governments priority is to simply promote GDP growth so as to justify to the World Bank, European Central Bank (ECB) and other financial lending Institutions that Ethiopia is maintaining a double digit growth and that Ethiopias quest in asking these lending institutions for even bigger loans should be exempted from any objection, requisition or any seeding doubt. Nonetheless, unlike the property bubble which we all have witnessed in most of European and North American countries who, in one or more unfortunate occasions, have come to experience a devastating near-collapse real estate phenomena, Ethiopia has not gone under a real estate upheaval or turmoil as if yet and whether the ongoing rising residential real estate prices will be able to stand the test of time will remains to be seen. Stay tuned, because the acclaimed , striking and memorable phrase - the so-called - double digit growth, utilized aggressively in advertising Ethiopia to the rest of the world in a bid to woo foreign Investors, as well as, Ethiopians in diaspora will soon be put to test and subjected to rigorous inter-calibration and validation. Only then, I repeat, only then, we can witness that the fictitious and sickening exponential growth in real estate price which we all have been witnessing throughout the years in Ethiopia is nothing but a mere drop in the bucket of what lies ahead for the economy. In conclusion, It is hard to comprehend the magnitude and speed at which Ethiopias real estate market is accelerating. However, things on the ground may not be as rossy as they seem. The question is how much longer can Ethiopias real estate market maintains its soaring price? Until we see the light under the tunnel, we can only phantom and be rest assured of the old proverbs which say - “What Goes Up MUST come down ! ...and... The higher you rise, the harder you fall !”
Posted on: Thu, 06 Nov 2014 18:59:09 +0000
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