What Explains the Sky-High Prices?
In the grand scheme of life, they say your first job is like your first love – a rollercoaster ride filled with thrills, spills, and a hint of naivety. My journey into the world of real estate in Addis Ababa was no exception. Picture it: a fresh graduate architect stepping into the bustling world of property development when nobody knew what real estate even meant! It was like explaining the concept of sushi to a room full of cows.
You see, Addis Ababa was an uncharted territory for the real estate business back then. Convincing potential clients that they needed property development was like telling a dog it needed a treadmill. And establishing terms and conditions for deals? Well, let’s say we were the pioneers of awkward negotiations.
To make things even more interesting, the housing price was so low that it felt like a Black Friday sale that never ended. If you told someone you wanted to buy a house, they’d look at you like you were auditioning for a stand-up comedy show. “A house? In Addis? Good one!”
But life, my friends, is all about surprises. After years in the real estate game, I crossed paths with investors who wanted to build rentable office space. Just when I thought things couldn’t get any crazier, the government dropped a bombshell: they wanted developers to use at least 60 percent of the rooms for housing. Mixed apartments, they called it.
The developers weren’t thrilled. They believed that providing open space for offices was the way to go. Who wouldn’t want to work in a spacious office, right? But alas, the government had other plans. They were playing a real estate-themed version of “Whose Line Is It Anyway?” where the rules are made up, and the points don’t matter.
Fast forward 15 years, and boy, what a ride it’s been! Thousands of real estate developers have joined the fray, and real estate prices have gone through the roof. I’m talking about a whopping 1500% increase in prices. It’s like the housing market took a masterclass in pole vaulting and never looked back.
But here’s the kicker: Ethiopia has been going through some serious political reform in the last five years. Prices of goods and services have been inflating faster than a balloon at a birthday party. Yet, amidst all this chaos, the cost of real estate has skyrocketed even further. It’s as if real estate prices decided to play a prank on inflation and went, “Hold my beer!”
I remember talking to my uncle from Jimma, who was a hotel and small factory owner there, by then, but decided to move to Addis. He invested in real estate and flats, and when I asked him why, he gave me a simple answer: the political atmosphere outside of Addis wasn’t precisely welcoming for business. So, like a wise investor, he decided to retire early and put his money into real estate.
And my uncle’s story isn’t unique. Many real estate buyers in Addis have found themselves in a similar situation. The houses being built don’t always match the income levels of the residents, and they aren’t exactly what people need. Instead, they seemed to be targeting new migrants from the countryside, who, at the time, were businessmen not entirely welcomed due to the political turmoil.
You see, real estate in Addis isn’t just about providing housing. It’s about property accumulation. It’s the city’s equivalent of a safe haven. Like a squirrel storing nuts for the winter, people are stashing away their savings in real estate, hoping it will shield them from the political storms.
But here’s the twist: unless the government takes on the responsibility of restoring peace and order across the country, the damage to the real estate market will continue to escalate. The influx of investment into Addis Ababa, a safe haven, has repercussions. It affects investment, job creation, and could potentially shift focus away from productive and manufacturing sectors, ultimately affecting the country’s currency generation.
So, the big question is: Is the price of real estate in Addis “Real?” Or is it just a reflection of political instability driven by ethnic feuds? Until the government prioritizes restoring peace and order, Addis Ababa will remain a haven, and real estate will continue to be the easy way to safeguard one’s resources.
Ultimately, the real estate journey in Addis Ababa has been nothing short of a rollercoaster ride. From convincing skeptics that they needed proper development to navigate government regulations that seemed like a comedy skit, it’s been a wild trip. And as the city grapples with political challenges, real estate remains the unshakable constant, offering stability in an unpredictable world.
So, strap in, folks, because the Addis Ababa real estate rollercoaster shows no signs of slowing down. It’s a ride filled with twists, turns, and a fair share of laughter, even when the stakes are sky-high. Who knows what the future holds for this bustling real estate scene? One thing’s for sure, though – it’s bound to be a real estate comedy of errors!
11th Year • October 2023 • No. 122 EBR