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Key Factors that Affect Real Estate in Addis

Ababa, Ethiopia
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The private real estate market in Ethiopia began
thriving during the late 1990s and early 2000s
when a number of real estate companies began
building homes in Addis Ababa, especially in the
suburbs. Over time the real estate sector in
Ethiopia has shifted its interest from building
modern villas in the suburbs to doting downtown
Addis with apartment buildings. And investing in
real estate in Addis Ababa has become a lucrative
sector for investors.
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However, there are a number of factors that
affect the real estate market in Addis Ababa,
Ethiopia. Let us touch on some of the key factors
below Demographics The composition of a
population that includes age, gender, race,
income, migration patterns and population growth
is termed as demographics. And this is one of the
major factors that play a significant role in
determining how real estate is priced and what
kind of properties are in demand. Whenever there
is a major shift in the demographics, a huge
impact on real estate trends becomes noticeable
for decades. Real Estate Developers and Realtors
in Addis Ababa, Ethiopia consider demographics as
one of their main criteria in determining what to
build, where to build, when to build and how to
market the end product. The key demographic
factor that real estate developers and investors
in Addis Ababa cannot afford to ignore is the
fast growing middle class that is in need of good
accommodation.
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Interest Rates Real estate in Ethiopia is also
affected by interest rates. Alterations in
interest rates can influence the purchasing
ability of a person when it comes to residential
property buying. The lower the interest rate the
lower will be the cost to obtain a mortgage for
buying a home. The recent National Bank Directive
that has lifted the obligation that was imposed
on commercial banks to put aside huge somes of
funds to purchase government bonds is expected to
drive interest rates down. And this in turn
increases the demand for real estate.
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Economy The state of the Ethiopian economy
also affects the real estate market to a great
extent. Economic indicators such as GDP,
inflation, unemployment, productivity and the
likes are the determinants of the overall health
of the economy. In short, we can say that if the
economy gets slothful, so does the real estate
market. The home-grown economic reform recently
introduced by the Ethiopian government is
expected to stimulate the economy. According to
the latest economic forecast, GDP is expected to
register double-digit growth rate in the current
fiscal year. As a result, the Real estate sector
in Ethiopia in general and in Addis Ababa in
particular is likely to boom. Government
Policies Real estate in Ethiopia also gets
impacted by legislations as the demand of
properties and prices get directly affected. Some
of the temporary real estate demand boosters
implemented by governments include tax credits,
subsidies, and tax deductions. Both real estate
developers in Addis Ababa, Ethiopia and buyers
need to be aware of the incentives the new
reformist government is keen to provide, which
will help them determine the changes in supply
and demand along with identifying the fraudulent
trends.
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