BUSINESSS PLAN ACT REAL ESTATE MANAGEMENT and DEVELOPMENT PLC

EXECUTIVE SUMMARY
The global E-commerce retail industry is experiencing sizable growth and will continue doing so in
the fore seeable future. The Middle East is one of the most prominent regions in the world which is
the owner of an E-commerce market that is expected to expand its sale volumes to $4.3 billion in
2020 from $22.3 billion in2016. Saudi Arabia is the country that is expected to experience the
largest growth in the GCC E-commerce market (42%), followed by UAE (38%), Qatar (10%),
Kuwait (25%), Oman (6%) and Bahrain (2%).

With the Millennial generation being the one most familiar with the use of tablets, smartphones,
and
computers, this demographic in the GCC, UAE more specifically, is the one spending almost 6 ½
hours onlineeach day. Once their mind has been made upon a product/service they proceed to
purchase it with no secondthoughts. The average amount of money the GCC Millennials spend
online on a single product amasses up to$332.

Home improvements and innovations are some of the top reasons that lead to managment services
and furnishing purchases, and in the GCC countries, plenty of people have plans to do that this year.
What also adds to the managment services demand is the fact that Saudi Arabia is expected to build
500,000 new homes throughout 2018, whichwill be in need of managment services and furnishing.

ACT’s competition consists only of indirect competitors such as, Home Box, IKEA, CB2 and other
similarcompanies, which do not possess the unique business platform ACT will conduct its
operations on.On this platform, managment services designers, managment services makers, and
customers will be able to interact with each otheron both, internationally and locally. The designers
will be able to publish managment services piece designs to theplatform, the customer can choose
between designs and decide on a managment services maker to execute and deliverthe piece to the
customer. Furthermore, the company will offer its own managment services designs too. On
everyoccurring transaction, ACT will earn 15% of the transaction cost and will focus its efforts
heavily on reachingthe client audience via various online promotion and marketing campaigns and
strategies.

The general manager of ACT will be responsible for all major decisions, operations, and processes,
meaning allother team members will be directly answering to him. ACT’s team will consist of
Office Administrator &Accountant, CAD Technicians, Customer Relationship Officer, Senior
Developer/System Administrator,Assistant Developer as well as a Public Relation/Social Media
Officer.

The strong points ACT has upon entering the market is the ability to provide a variety of products
to theircustomers in one place. Next, the company’s website allows for easy access to 3D
showrooms, managment servicespreviews and fast and simple online payment. Additionally, ACT
will uphold quality standards and enforce them onto the managment services designers and
managment services makers who wish to access customers via ACT’s platform. Onedrawback is the
limited potential customer base, the majority of the visitors to ACT’s website are expected totech-
savvy customers. Some customers might be reluctant to make a purchase if they cannot
“experience” themanagment services piece in real life. Not being able to touch, feel and see it in
person might drive some customers away.On the other hand, the lack of this type of service in the
GCC region is what makes ACT stand out and offer anew and exciting way to browse and purchase
bespoke managment services.

Some of the more serious threats that ACT needs to be wary of are the political instabilities in
neighboringcountries and the possibility of them transferring into Kuwait. Big corporate
competitors that may copy ACT’splatform and business model, and bully out the company out of
the marketplace. Lastly, the low-quality designsand managment services pieces that are made in a
feeble fashion should be reduced to a minimum.

The financial projections indicate that ACT will not be making any profits during the first three
years, sincestarting its operations. The losses are expected to decrease in the second year. In the first
year of operations,the company will record a shortage of 16,040KWD, decreasing to 14,040KWD
in the following two years.
Situational Analysis

INTRODUCTION

In today’s Real estate business world, an efficient and effective its soft part management is key to
success. The rapid growth of the internet and technology and availability of different professionals
in the market provides endless possibilities for Real estate management services business start-ups
to offer creative solutions. Dynamism and complexities with many stake holders in real estate
investment creates opportunities for professionalism oriented management service enables to
accompany by very efficient and effective services. All it takes is to offer consumers a simple, fast
and exciting way to shop on the one stop.

In order to evaluate the business climate for the business, a thorough inquiry and insightful
information regarding the target market, industry trends, the customer demographics and
competition will be provided in the following pages.

Market Overview

Demand side analysis

Mekelle is the capital city of Tigray Regional State. The city has been experiencing rapid
population growth over the past 70 years. According to UN, the population size of Mekelle city was
estimated at 14,000 people by 1950. Furthermore, the current population size, excluding the influx
of people to Mekelle in the past two years due to political instability in some parts of the country, is
estimated to be 524,000. This shows the population size of the city has grown by 3,642 times within
70 years. Considering migrants due to political instability, the population size of Mekelle stands at
600,000 people in 2020. According to UN (2020), disregarding migrant, the population size of the
city is projected to grow steadily at an average growth rate of 4.064 percent over the coming 15
years. According to UN population projections, the metro area population of Mekelle by 2035 is
projected to reach 953,000. The metro area population of Mekelle city is expected to surpass
1,000,000 by 2035. The following table summarizes UN population projections of Mekelle City.

Mekelle City Population Projection

Year Population Annual Change (%)

2021 544,000 3.76
2022 565,000 3.86
2023 587,000 3.89
2024 612,000 4.26
2025 637,000 4.08
2026 664,000 4.24
2027 693,000 4.37
2028 722,000 4.18
2029 752,000 4.16
2030 784,000 4.26
2031 816,000 4.08
2032 849,000 4.04
2033 883,000 4.00
2034 917,000 3.85
2035 953,000 3.93

Population Growth and Mekelle Housing Situation

As described above, the population of Mekelle is projected to increase over the coming 15 years.
The population growth is further expected to be driven by migration from rural and other urban
centers, that is, migrants are expected to be attracted by the growing business expansion that
Mekelle city has been witnessing very recently. The Mekelle industrial park as well as large
domestic and foreign private investments are expected to boost economic growth in Mekelle city,
which will in turn induce migration to Mekelle city. This will further increase the population size of
Mekelle city much higher than the projected population increase in the foreseeable future.

The expected population surge will have strong impact on the already challenged housing situation
of Mekelle city. The recent flocking of people to Mekelle city from other parts of the country
alone has created high demand for housing in Mekelle city. In fact, it is the basic law of economics
that whenever, demand outstrips supply, the price of commodities including houses rises. This is
happening in Mekelle currently. To substantiate, house rental prices in the past 2 years has
increased by as much as 70 percent. Cost of a 175 square meter plot has increased by 50 percent,
i.e., it has increased from 1.5 million birr to 3 million Birr over the last three years. Further, house
rental price in some locations of the city such as Hawelti, 18 Kebelle and Adishinduhun has
recently increased by as much as 100 percent. The current house rental price of one room that is
five by four meters costs 2,700 birr per month. By now residents pay birr 5,000 for a two-room
residential housing, which costed birr 2,000 to 3,000 per month. Also, Vila Houses are going for
birr 10,000 a month compared to 7,000 Birr previously.

Neither the government nor the private sector has not met the immense housing demand of Mekelle
city residents in particular and other major cities in general. Housing shortage, despite the
government’s effort of addressing the problem, appears distressing and likely to persist in the
foreseeable future. One of the underlying challenges in housing situation in Mekelle is inadequate
supply of serviced land by the government. This can be explained by the fact that the informal
unplanned housing (recently demolished by government of Tigray) has been increasing at a rapid
pace a result of high urbanization in Mekelle city.

The real estate sector are required to play the role in creating a strong and efficient housing
development market which is a very lucrative market if done according to the need type of the
customers. Similarly, an access for hospitable foreign direct investment is a mandatory element for
the companies to do with this kind of business sector effectively.
Mainly there are two types of Real estate operations which also include many segments under each.
The different dimensions of real estate segmentation in relation to the real estate market are
Residential and Commercial. Income property that includes residential and commercial properties
that are leased out and expected to provide returns primarily from periodic rental income.
Residential properties include single family properties (houses, condominiums, cooperatives, and
townhouses) and multifamily properties (apartment complexes and buildings). Commercial
properties include office buildings, shopping centers, warehouses, and factories.
This market seems conducive and easy to operate in to the infant real estate industry players.
Mainly, the vacant plots of lands that can be leased by the city administration that are best situated
are hard to find if not very expensive. And it can be justified also with regard to the capital
requirements and capital tied-up until these commercial properties started to give yields. This is
especially true, if developers are to think of investing in commercial properties over the peripheral
areas of Mekelle in which they are now developing their residential properties (also with the
financing terms less risky and less costly relatively) their return will not be fast and cost of capital is
pretty high, including property management.
INDUSTRY TRENDS
In a report commissioned exclusively by Market Research, it’s explained that as the year progresses
onwards and downwards, few outstanding trends concerning the Real estate Industry market have
been noticed. Some of them are:

1. Government attitude to shift from urban Morphology Prevailing practices

In Ethiopia, the Constitution stipulates that land is owned by the people, giving the government an
important role in land management and administration. In urban areas, the local governments act as
the sole suppliers of land, currently through two means: direct allocation for social Real estate
associations (‘allotments’) and auction for private Real estate developers.

In its Urban Housing Provision Strategic Framework, the Ministry of Urban Development, Housing
and Construction has called on cities to prepare large amounts of land with infrastructure, according
to structural plans, and to make that land available to condominiums, cooperatives, enterprise
housing, real estate investors, developers and private individuals.

At the same time , In Ethiopia, city proclamations have endowed city governments with increasing
powers, leading to economic convergence across cities and falling spatial inequalities. Cities tend to
have used their new powers well, by favoring the growth of a broad base of businesses. Going
forward, ULGs could spur job creation with the right interventions to target the business
environment for firms’ growth. However, the financial and institutional capacity of local
governments severely limits their ability to do this

However despite this effort , Government unable to satisfy demand for land through formal
channels (allocation and auction) drives informal development; In the formal sector, incentives for
higher-density development are undermined by allocation of land below market value; • Differences
between urban and rural land-rights regimes tend to encourage informal development beyond the
city boundary, further driving outward expansion; and Horizontal expansion of built-up land, along
with low-density development, undermines the efficiency of urban areas in terms of infrastructure
and service delivery and increases the cost of housing development. The main but not all causes of
the results of urban morphology prevailing practice and its associated impact are discussed in the
under below topics:

The problem of allotting, providing at bench market price and channeling by auction

The problem of providing land by allotments

The practice of allocating land below market prices removes incentives for higher-density planning
and development, leading to economic underutilization of urban land. Entities that have obtained
land for free or at below-market prices do not have any stimulus to use land prudently and frugally.
These entities include government agencies and enterprises, social services, infrastructure
providers, non-governmental organizations, religious organizations, large and small industry, urban
agriculture, and sometimes unmistakably commercial properties such as hotels
Housing associations, SME associations in Mekelle have been major recipients of cheap land,
which unsurprisingly boosted consumption of land per unit, from about 70 m2 in 2020 to 210 m2
on average. This has resulted in a great increase in the cost of housing production and/or off-budget
subsidies provided by the Government in terms of the opportunity cost of land.

In the formal sector, especially in Mekelle Real estate investment inappropriate lot size regulations
incentivize low-density development and affect the affordability of land and housing. Large
minimum lot sizes 140 for residential and commercial use, coupled with limitations on land plot
coverage and building heights, discourage high-density formal multi-family inhabitation within any
given formal plot, making formal land and housing unaffordable for many residents

The system of municipal finance influences the resources available to local governments as they
attempt to provide infrastructure and services to rapidly growing urban populations. Current
financing arrangements rely heavily on municipal own-source revenues, which are insufficient to
fill the gap in urban infrastructure and services. The majority of intergovernmental fiscal transfers
fund salaries and other recurrent expenditures, leaving limited resources for capital expenditures

The problem providing land by direct allocation at bench mark

Further, direct allocations take place at “benchmark” prices (which since 2011 have to be set up at
the cost recovery level). The benchmark prices continue to be substantially below market prices.
Thus, in 2013, the benchmark prices in a number of cities (e.g. Bahir Dar, Dessie, Kombolcha)
were dozens or even hundreds of times lower than auction prices, while in cities that already
increased the benchmark prices (e.g. Addis, Mekelle, Hawassa, Sheshemene), the difference was 2
to 7 times lower than auction prices. 101 Currently, recipients of the allotment land include
government agencies (often with very generous allocations), social services and infrastructure
providers, non-governmental organizations (NGOs), and religious organizations, but also and
housing cooperatives, large and small industry, urban agriculture, and sometimes unmistakably
commercial properties, such as shopping centers or hotels.

This resulted Ethiopian cities to have vacant or underused land in prime locations, which could be
leveraged for denser and more contiguous development in existing urban areas. One outcome of a
lack of market valuation of land, alongside government inefficiency in bringing land to market, is
that undeveloped land often constitutes a high proportion of total city territory: about 46 percent in
Addis Ababa and Mekele, 25 percent in Bahir Dar, the vacant, buildable land has a potential
capacity of nearly 800,000 households. As shown, Addis Ababa has already developed a large
proportion of its vacant land near the city center, but much land is still available within the
administrative boundaries. 86. Moreover, several cities report that government agencies hold
excessive land.
The problem of providing land by auctions
Despite the fact that that recent auctions in all cities clearly indicated high unmet effective demand
for residential and commercial/industrial land, local governments continue using auctions only for a
small fraction of the total land parcels allocated: such like 6.2% in Addis Ababa during 2011-2013
3.6% in Mekelle, 2012-2013, 2.3% in Kombolcha , 2012-2013 ,2.9% in Bahir Dar in 2013 (though
it was planned to auction 24% of the land slotted for allocation).

Land for people, businesses and public uses, as sole supplier of land for formal development, the
government has not provided enough urban land to meet demand for residential or business
purposes. Unsatisfied demand from even the wealthiest urban families and businesses is well
illustrated by land auctions in cities, where the number of bidders has been 12–24 times higher than
the number of plots for residential land and 3–7 times higher than available plots for commercial
land.Yet the total need for residential land is much higher than these numbers suggest, because
lower and middle -income people do not take part in these auctions

Land management practices undermine government policy that seeks to promote compact and
efficient urban form, while also contributing to the expansion of informal development; • These
practices are expensive for local governments; and • Lack of rural land rights act as a constraint on
rural–urban migration, which has the potential to slow economic growth. . Urban areas can be
defined and characterized by several means, including the extent and shape of continuous built-up
areas, their compactness or fragmentation, density of physical structures or investments (such as
roads), and the mix or intensity of land use. Global evidence shows that urban areas rarely fall
neatly within an administrative boundary. However, it is important to note that urban character is
strongly influenced by market forces, local planning practices and regulations, and investments in
infrastructure, among other drivers. Perhaps the key drivers in determining the shape, size and
character of an urban area are the prevailing land management practices.

It is important to note that informal settlers in Ethiopia are not necessarily poor. Many researchers
point out that they also include middle class households relocating from congested dilapidated
central areas of cities and building good-quality housing outside cities. On the demand side, this
process is fueled by a shortage of land for formal development. There is strong unmet demand for
land from people of all levels of income, the poor in particular, but also from businesses., for many
people, there is no place to turn to except to informal settlements due to limits on the circulation of
land available for development, which drives up the cost to build and purchase housing.

Moreover, because of the split between urban and rural land rights, incentives exist for informal
development outside the city boundary. As soon as previously rural territory is planned for urban
expansion, its inhabitants become the subject of “default” expropriation, with compensation only in
cases where they have legal rights to the land, and at prices that are many times lower than farmers
can fetch on the informal market. This incentivizes many rural residents on the urban fringe to
preempt such processes and subdivide and sell the land, helping to satisfy demand for land and
housing not met through formal channels within the city and further encourages the expansion of
informal settlements. 77. However, available data indicates that prices on the informal market are
substantially higher than compensation for expropriated land, strongly incentivizing informal sales

The Rise of Middle income Real-estate Investors for community based development
The need of land for people, Business and public use has been increasing since the last decades. The
number of middle income households has been increasing, resulting in the demand for affordable
housing. Owning land privately for horizontal development became inevitable for middle income
households. Investment cost for infrastructure and other facilities also a concern of Government.

Almost all middle income levels do not fit to the Real estate segment and that is why it remained a
market for the Diaspora. And this excessive reliance on those groups may seriously affect its
prospect. Players are indeed big investors with big money and most of which are Ethiopian
Diasporas. Almost all real estate companies’ are based on Diaspora clients not basically on the
domestic demanders; most of all, because of their costs are high among other reasons. Facts
revealed that even most of the clients of some of main competitors are these Diasporas out of most
of these clients have been from the United States which is in severe economic downturn.
This can indeed affect the ability of these Diasporas in financing their payments for these real estate
developers for which their employment may be endangered. A general market slowdown can be
therefore expected due to this relationship and dependency of the market with these economies our
Diasporas (main players in the market) are in.
The sustainability development agenda on real estate investment is a prior agenda and should adopt
the following practices. Such us :Reinvesting in existing communities, Focusing development in
centers and corridors, Providing a range of housing and transportation choices ,Encouraging healthy
lifestyles, Promoting resource conservation and Promote a mix of uses (housing, retail, jobs)
This deserves to change the culture real estate Traditional development characterized by traditional
developer domination in contributing equity, owning finished product and receiving ,Economic
benefits in sale of the finished product to Community-Based Developer which is Fee based, may
contribute equity and Motivated by creation of units
Hence Real estate stake holders looking partnership to develop compact and Vertical Mixed use
buildings which are environmental friendly and technologically driven, especially to the customers
preferred small spaces for their functioning.

Lack of Real estate stake holders collaboration

A real estate market can provide a lot of social and economic yields or benefits to a country if it is
operated at its level best. The housing front is most vital for national economy and human
settlement. The real estate market is potentially rich to accommodate many services and operations
for employment and investment. But in an inefficient infant markets the sector have much gap to be
filled.

There is a huge gap between the demand and supply of houses in Mekelle, the capital city. A
vibrant real estate sector is crucial to economic development. Similarly, transparent and cost-
effective land use policies offer a hospitable environment for foreign direct investment as well as
local projects. At present, however, real estate lending and real estate transactions in Ethiopia are
severely constrained by a number of factors, including a large concentration of unregistered
properties, delays and other problems in enforcement of legal contracts; excessive taxes, fees, and
permitting requirements, and urban development activities stalled by an overly-layered
administrative framework and by the lack of resolution of the restitution issue

The supply from the private sector was growing, and according to the Ethiopian investment
Agency, The number of licensed companies in the country is really big number (that would
constitute a registered capital in the market in to Br.53 billion), when actually operating numbers
are less than 3% of this total.
Lack of Modern market system, real estate operations, and basic infrastructures (and
complementary requirements) to the market may impede efficiency and liquidity. The real estate
brokerage business in Ethiopia is not as well developed relatively. Buyers and sellers rely on agents
locally called “Delalas” for buying and selling homes. These are traditional agents with no formal
education in real estate but who basically mediate between buyers and sellers. A great deal of
negotiations is involved in buying home. This actually affects its liquidity due to many reasons.
Home mortgages are almost nonexistent in Ethiopia. Most real estate transactions are conducted on
cash basis. This has limited the liquidity of homes.
The residential housing market in Mekelle is the price one has to pay both in relation to those in
other metropolitan areas of the world as well its almost incongruous disparity with what the vast
majority of residents in the capital can afford.
The Ethiopian real estate has been booming for much of this decade. In many areas, prices doubled
and even tripled in a span of a few years, and the concern to the house holds is lack of adequate
affordable housing. The Mekelle real estate market is based mainly on the Ethiopian Diaspora and
remained very thin and illiquid. With the backlog of housing need, and inadequate existing supply
for housing (aggravated by the long construction periods); prices are currently seriously
unaffordable by almost all households in Mekelle. Available infrastructure to this very infant sector
(or market) including its financing is poor.
The real estate development process is a complex, time-consuming, capital intensive, multi-
disciplinary, externality-generating, public-private endeavor. Unfortunately, the conceptual models
used to describe this process are not avails in our case. As the result the real estate investment lead
to confusion, frustration, duplicity, and extraordinary risk-taking as participants in the process have
very different understandings of the development process. It is time to deal on the issue and
suggests that this behavior is due in part to the lack of understanding about the nature of the
development process and a clear roadmap that can help stakeholders and participants discuss
“where we are, where we are going, and how we get there.”

In doing this, Sustainable development and green building techniques should be understood and
analyzed in the context of the life-cycle of the building, rather than at the beginning of building
construction. The most important analysis of the sustainable nature of a development is made when
the development is seeking various public approvals prior to the construction of horizontal
(infrastructure) or vertical (building) improvements
We have to have clear understanding in defining who is a real estate developer. In fact, the
“developer” in the real estate process is really many different people playing many different roles in
the in the process of creating value throughout the lifetime(s) of the property.
This will help us to describe the complex, multidisciplinary nature of the real estate development
process. The description should lays out what happens and who does it and should indicates what
should happen, who should do it, and when it should be done.
So This requires a new model of the real estate development process considers the overall life-cycle
of a real estate project. The overall life cycle of Real estate projects consists seven development
stage namely land banking, land packaging, land development ,Building development and Building
operating stage .
In each stage, the developer achieves certain tasks by spending money, using unique talents and
skills, and in the process taking risks to increase the value of the property. In each stage, the
developer buys one thing and sells another. In each stage, the developer must answer the following
questions:
• Can They do what’s got to be done?
• Do They have the necessary skills, resources, time, and team support?
• Can they take the risk of failure? and
• Can They create real value?

Target Market and ACTs strategic intervention

The company model for identifying its target market revolves around real estate actors engaging at
five stage of development cycle. Namely: land bankers, land packagers, land developers, Building
developers and Building operators.
Stage1: Land Bankers
The “Land Banker” acquires or holds undeveloped or “raw” that he believes will become attractive
for future development through general and broad market trends or perhaps. Land bankers can be
active in the pursuit of opportunistic “land buys”. Although many land bankers can be advertent
land owners such as estates or government agencies or public utilities. This is a relatively passive
investment position. Good examples of “land bankers” are public utilities, universities, and
inheritors of the “family.” When the market conditions are right, the land banker then sells the land
to a “land packager”. The land banking stage and the redevelopment stage are really the same
except that the land banker usually has “green fields” and the redeveloper has “brown fields.”

Stage 2: Land Packager’s

The “Land Packager” buys the raw land from the passive land banker and then improves the value
of the land through conceptual land planning, zoning changes, financing schemes, or other “paper
enhancements” like title insurance, accurate surveys, or environmental studies. Examples of land
packagers are land planning firms, politically skilled lawyers, and governmental agencies who
attempt to obtain government approvals of land they own. This “packaged land” is then sold to the
“land developer”.

According the information available Many Ethiopian cities have vacant or underused land in prime
locations, which could be leveraged for denser and more contiguous development in existing urban
areas. One outcome of a lack of market valuation of land, alongside government inefficiency in
bringing land to market, is that undeveloped land often constitutes a high proportion of total city
territory: about 46 percent in Addis Ababa and Mekele,

With understanding of this, Act identified Government, social organization and others which hold
unused land as major target market and intended to deliver professional service on how to improve
the land through conceptual land planning, zoning changes, financing schemes, or other “paper
enhancements” like title insurance, accurate surveys, or environmental studies

Stage 3: Land Developers

The “Land Developer” buys the land with the paper enhancements from the land packager and then
improves the land so it can be sold as finished building pads to building developer. This usually
involves the construction of horizontal infrastructure such as roads and utilities as well as common
improvements such as water dentition and recreational facilities. A good example of the land
developers are master-planned community developers who construct the roads, utilities, and
recreational amenities and then sell building lots to home builders.

According the data from Mekelle city administration 150 hectare amount of land prepared for real
estate development .so this demands a proactive approach since one of the short comings such as
delay and its associated effect of the real estate sector in Ethiopia comes due to proper management
and guiding policy for land development stage. Most leases require developers to deliver their
housing units within 24 months from the signing of the lease contract. In practice, this has been a
difficult condition to meet for almost all developers. For the bona fide developers, the primary
reason for the delays include unmet infrastructural work (roads, utilities) and a rapid and
unexpected escalation in construction costs.

Act as a company will strongly insist policy makers to focus on this stage and also to treat
separately. We advised Government to allow the land development stage to large investors and
collect revenue from created values on the land.

Building developer
The “Building Developer” buys the finished pad from the land developer and then does the vertical
development by constructing the building improvements. During construction, the building
developer may also attempt to lease the building so the finished building can be sold to the building
operator. Home builders are a good example of building developers. On the commercial side,
building developers are often called “merchant builders. Accordingly act Real estate management
identified, Housing cooperatives, Tegarus out of the region and Real estate developers as its target
market.

Housing cooperatives
Home construction by Housing Cooperatives: Cooperative housing developments, organized by
groups that share a common employer or membership, have been a long-standing feature of the
residential real estate market going back to the days of the previous government. At present, the city
administration has registered more than 100 housing cooperatives. The minimum membership in
housing cooperative is 20. A good number of these cooperatives members are in the middle-income
group. Many more are still on waiting lists for land allocations and this segment of the market will
thus continue to be significant share of the overall real estate market in the years ahead.

Owner built housing

Owner-built housing construction: Housing units built by owners typically by Diasporas and
wealthy Tegaru out of Region were by far the most common type of new residences by tegarus out
of the region before the advent of government-built condominiums and real estate developers
within the past decade. Though relatively limited now, this portion of the real estate market is still
active in older, more established residential neighborhoods such as Hawelti,Adhawsi and others.
Costs for owner-built construction are, of course, generally higher and this segment of the market
thus tends to include the full range of housing units from modest homes constructed over extended
periods to large and luxurious homes often built by razing or replacing older properties

Real estate developers

Residential and commercial neighborhoods initiated by Real Estate Developers: Residential homes
and neighborhoods built by real estate developers are now becoming increasingly common ever
since the first large-scale development was initiated by the pioneer in this sector, namely Ayat Real
Estate. At present, the dominant real estate developers for residential villa homes include: Ayat
Real Estate, Sunshine Real Estate, Habitat New Flower Homes, Ro pack International, Ambassador
Real Estate, Trancon Real Estate, Gift Real Estate, Enyi Real Estate, Country Club Developers,
Akakas Real Estate, Boran Real Estate, Flintstones Homes, and Zenebe Frew Real Estate. Many
more are also operational, though with more limited activities. For apartment developments, some
of the most active developers include Ayat, Sunshine, Access Real Estate, and Flintstones Homes.4
The developments of these private developers range from very luxurious, high-end communities
that sell multi-million Birr homes (e.g. Country Club Developers and Akakas Real Estate) to sellers
of more moderately priced homes (such as those of Enyi Real Estate, Sunshine, and Access Real
Estate).

Accordingly we as a company determined to provide property professional service to help housing

cooperatives efficiency, to shift the owner built culture specially The Tegarus out of the region to
invest on commercial real estate investment for better return and to help Real estate developers
efficiency and effectiveness.

Building Operator
The “Building Operator” leases up the property, manages the property, and develops a building
operating history so it can be sold to other building operators during its economic life or sold to a
building renovator at the end of its economic life. The biggest building operators are usually
referred to as institutional investors which may include pension funds, insurance companies, or
public real estate investment trusts

Accordingly our company identified cooperatives, companies and enterprises engaged on real estate
investment for commercial purpose to benefit from its property management service.

Competition Overview
In order to identify the business’ competitors, it is important to understand the different services
available on the market, which counts as alternatives or substitutes to the products/services ACT
offers. Because of the Popularity of property professionals service in the real sector in the world,
the market for it has too, experienced growth and have convinced even more customers to buy
different types of services at full or partially will be marketable at regular basis.

After a thorough google search, it was concluded that there weren’t any direct competitor
companies present Generally in the country and particularly in Tigray which have the same
business concept as ACT’. However, there are other companies such as Managment services retail
stores and online managment services stores that can meet the same customer demand/need.
According to these categories, further research on the competitors in that segment followed.
Once defined, the competitors have been analyzed though few criteria such as product feature
customer satisfaction and social media etc. In the spaces below the detailed competition and
analysis are presented

Real estate developers

Real estate management services

Government Aspects

1. Whether you are launching a shop or a stall, you will need a license from your local
council.Councils vary in terms of their requirements but you usually have to pay a small fee.
You may alsohave to pay business rates, which depend on location and size so make sure
you get in contact with your local authority before taking any steps forward.
2. The Kuwait Government’s e-Government website offers basic services for both individuals
andbusinesses. An electronic signature law, based on the United Nations Commission on
International Trade Law (UNCITRAL) laws on electronic commerce, has been approved,
and e-signatures are being used by some government offices.
3. The Kuwait commercial law for obtaining a commercial license/permit states that there must
bea physical commercial location. Other countries in the Gulf Cooperation Council do not
have such requirements. Commercial locations are in specified areas only and that does not
include residential areas so the individual can’t start a business from their home.
4. Local companies that provide online payment platforms can’t provide their services to
nonregisteredcompanies With the new law reforms, there are some exceptions to the rule,
but generally, a Kuwaiti citizenhas to own 51 percent of the shares of the company, in order
to practice business in the country.
5. When the founder submits the papers to obtain a permit, they will also need to register
thecompany’s trademark including the logo. So it is advised that those issues are finalized
internally, before submitting the documents.
6. A general partnership agreement can be found at the Ministry of Commerce, also the
general draft for the articles of association of the company. It is advised that it should be
read and reviewed carefully even if they are general and are commonly used in Kuwait. The
Internal policies are also things that should be considered

Internal Analysis
With the completion of the external analysis, where information regarding the business’ external
surroundings was presented, this chapter will focus on elaborating the inner-workings and
mechanisms of ACT that enable the company to properly do its business operations and activities.
The internal analysis will expand upon the company’s business model, the business’ mission and
vision, marketing mix, as well as the organizational structure and process workflow

The Business concept is designed to sell Time and talent for these has treasures to invest on Real
estate sector. We are determined to commit our resource for value creation on five development
stages of Real estate sector. Namely: land banking, land packaging, land development, Building
development and Building operation.

Business Model
Real estate development is the process of creating value by making tangible improvements to real
property. The development process ranges from land speculation and new construction to the
renovation of existing buildings. It is the process by which physical places where we live and work
are conceptualized, designed, constructed and occupied. Successful implementation of this process
is crucial to our economy along with our everyday lives. As Winston Churchill famously stated,
“We shape our buildings, and afterwards our buildings shape us.”
The development of real estate involves engagement various stake holders including Government
Real-estate investor’s financial institution and a plethora of disciplines and professions, including
architects, engineers, planners, lawyers, bankers, public officials, construction trades and others.
Each team member plays an integral part of the real estate product delivery process. The real estate
developer is the one who oversees this process and coordinates the information generated by each
project participant. A successful developer does this by ensuring that tasks are being completed in a
way that allows for information to be generated and shared efficiently. A lack of effective
information sharing will require team members to make assumptions which could prove costly or
result in a less than ideal outcome.

The Business model is developed with clear understanding Real estate development a broad impact
at macro level , the existing chronic information sharing practice, chronic of professional service
at micro level and above all lack of strong stakeholders collaboration for its adverse impact .So
ACT Business concept is designed to sell Time and talent for successful information sharing
between stakeholders and deliver property professional service for these has treasures to invest on
Real estate sector. We are determined to commit our resource for value creation on five
development stages of Real estate sector. Namely: land banking, land packaging, land development,
Building development and Building operation.
The company business model, in its uniqueness, revolves around 5- stages of Real estate
development. In this investment, customers are advised to benefit from the company service in
managing the eight tasks to be performed in each development stage . namely: Acquisition,.
Financing,. Market Studies and Marketing Strategies, Environmental, Approvals and Permits,
Improvements, Transportation and Accessibility and Disposition.

The company will publicize the existing opportunities for real estate investment and post a detail of
services in its own website. Once the desired customer find their desired management service, they
can further browse available Real estate engagement options s within their country, which have
already ready to market and our service for a certain price. In short, this is how the three sides of
the marketplace, the Real estate investors, Government, and financial institution will interact with
each other and which enables maximization their wealth:

Customers can select preferred services among different service categories, and then they can
negotiate the preferred service to execute the contract. Once they commit the transaction with a
down payment, the money will be escrowed to the platform account until the desired deliverables in
each stage delivers to the customer.
 ACT customers are able to purchase professional services through another route also. They
can submit a textual description of management service they desire and/or submit
physically or using other communicating tool. The platform administrators will generate a
project profile for the requested service. The generated service will be published under a
special category called "Customers Inspired service", from which customers with their own
password can browse those services and add what they desire to their project profile and
have access to follow a project deliverables, price tag and a timeframe for delivery.
Customers can then follow the regular procedure to purchase those services (as described in
the paragraph above).

MISSION AND VISION

Mission
The Company’s mission is to deliver an efficient and effective property professional service and
facilitate the process real estate investment for desired customers, by bringing professionals for its
soft part management in one spot to cater for relevant customers.

Vision
ACT’s vision is to be the “go-to” spot when it comes to purchasing Real estate soft part
management agency in the horn Africa

Product/Service Specification 4P
The marketing mix will enable the company to combine the 4P’s (product, place, price, and
promotion) in order to have the best possible market exposure and reach the desired client audience

PRODUCT/SERVICE
ACT will offer a couple of services to the company’s customers in each five stages of Real estate
developments. First and foremost, ACT provides a free-of-charge Real estate related information
with its communication plat form for stake holders categorized as land Bankers, land packagers,
land developers, Building developers and Building operators and the company services for required
deliverable at each stage.

The tasks that need to be accomplished in each stage of development can be divided into eight
major categories. Whether these are the right eight categories, or if there should be more or less
categories, will continue to be examined and discussed as the development matrix evolves. The
categories may overlap, and the distinctions may be fuzzy and blurred. However, it is important to
note that each stage begins with the acquisition tasks and ends with the disposition tasks. The other
tasks are not done in any particular order and many are done simultaneously. The categories are:
Acquisition, Financing Market Studies and Marketing Strategies, Environmental Approvals and
Permits. Improvements, Transportation and Accessibility and Disposition

To clarify, the acquisition tasks may determine “to pass on” or “not buy” potential development
property, but the process of evaluating the property as a possible acquisition is important. In the
same manner, the disposition tasks may lead to the decision to “not sell” the property, and to carry
forward into the next stage of development. Again, it is important to evaluate the disposition of the
property and the capturing of the value created. Even if a developer does not want to sell the
property, he must undertake the acquisition tasks for the next stage and objectively answer the
question, ”Would I buy this property if I didn’t already own it?”

Accordingly ACT Real Estate Management and Development Plc., is designed to provide a broad
service of consulting and Management agency for the sectors stake holders. The services are
categorized as follows:
A. Real estate Investment consulting
B. Real estate investment management agency

Real estate investments consulting

The development strategic document For Real Estate management and development for real estate
for accommodation, retail, lodging, and production functions will be the starting point of our duty.
Our objective is to maximize wealth all stakeholders. Our stake holders are Government agencies,
House Hold associations, private investors and financial institutions. We strongly insist on
proactive approach in pre identifying problems and providing solutions on the sector. Our strong
desire is to create a plat form which brings all stake holders resources bring it in to one to succeed
Real estate investment in the Region .in doing that , we will help our clients with provision of
Marketing researches, feasibility study, Project implementation documents and other knowledge
Documents to facilitate successful implementation of Real Estate investment Projects. Our
company outlined some issues that should be addressed to see success full real estate in our Region.

Real estate investment Management service

Architect, Design and engineering

The ACT Real Estate founder’s team has given a great emphasis to Architect, Design and
Engineering. The department is led and staffed with a well-respected professional in the country,
which specializes in residential mixed use architectural design. The Company’s approach is to
achieve excellence through rigorous attention to detail and to discover the qualities unique to each
specific project with the goal of enriching the local environment has experience designing
Comparable Buildings with Local touché architecture.
Management agency
Our company will work exclusively with stake holders for achieving strong reputation to become
the premier real estate permit, fees and other legal process facilitator in the region. We are
knowledgeable in all aspects of the development Process, including the site plan; special exception
and use permit processes, zoning, variance and sub division approvals. The firm represents
developers and property owners during the Construction process and marketing sales and property
management agency during operating stage

Our company service designed on three categories of Real estate development .this is summarized
in the under below table:

category Stages Company service and deliverables

Land acquisition Stage:1Land banking Feasibility study about the potential
development of the land
stage2:Land packaging Land with plan, approval and studies
Land development Stage3:Land development Buildings designs, lots ,pads and Bays
 Stage4:Building Detail building construction design and
development construction design
Real estate Stage5:Building operating Sales agency
operating stage Management agency
Management agency

Through those two services, ACT also provides a free-of-charge channel where customers,
designers and managment services makers can reach and communicate with each other.

The company generates money only once a purchase transaction occurs. The money will be
generated according to the described scheme above. In the case where the purchased service was
created by the platform itself, the design commission will go to the platform on top of the regular
transaction commission.

PRICE
The price for ACT’s chargeable services will be presented in this segment of the marketing mix.
The Company is established to provide time and talent resources for real estate stakeholders in
return to generate revenue for its service.

Company services % of project duration % of project Company

time cost service price
of total
project cost
Concept 5%-20% 8-31 weeks 0%-5% 1-3%
Feasibility Study 10%-20% 16-31 weeks 5%-15% 3-5%
Planning/ 15%-25% 23-39 weeks 15%-30% 7-15%
Financing
Construction 30%-60% 47-94 weeks 40%-75% 10-15%
management
Sales/Rent-up 5%-15% 8-23 weeks 5%-10% 5-10%
(operations)

ACTS service’s to kind of Real estate projects and price parameters with its pricing factor for
1000,000 real estate project costs are discussed in the under below table :

Company services and prices for stage1,stage2,stage 3 and stage:4 Real estate
development cycle

services %to Low cost average Highes

project t
cost
concept 0.01 10000 0.02 20000 0.03 30000
feasibility study 0.03 30000 0.04 40000 0.05 50000
planning and financing 0.07 70000 0.11 110000 0.15 150000
construction 0.1 100000 0.13 130000 0.15 150000
management
Total 210000 300000 380000

Company service and prices For stage :5 real estate development stage

services % to
Total
revenue
sales 0.04 40000
Rent 0.04 40000
building mangment 0.04 40000

PLACE (DISTRIBUTION)
ACT will not have a physical location for inventory, showroom, or logistics administration because
the business at its core is providing soft part real estate management service that facilitates services
Real estate investment stake holders. The only brick and mortar establishment the business will
own will be a working office in Mekelle and Addis for administration purposes.

PROMOTION
Since the company will abandon the traditional brick and mortar type of offering and selling
products/services to customers, promotion (especially online promotion) plays a massive part in the
success of this business venture.
ACT has some strategies on how to reach the customer audiences, in order to promote their
products and services. They are detailed below.
 Having representatives in the Middle East, Europe, and USA countries and
contracted/registered Real estate investors in each of those countries.

This way the company will have a network of Real estate stake holders, which will help the
business, promote locally in each country, which will work both ways in the terms of promotion.
ACT will promote the opportunities of Real estate investment on its website, and the Company
services will funnel our customers to ACT’s platform.

ACT will have a presence on prominent and renowned social media platforms, such as Facebook,
YouTube, Instagram, Snap Chat, LinkedIn, Interest and Twitter.
The majority of the world population spends a vast amount of time on these and other similar
social media websites, ergo the promotional exposure and the chance to familiarize the public with
the company’s business using these promotional channels, is a valuable asset in the pursuit to reach
wide client audiences.

Another strategy ACT will consider employing is influencer marketing, the practice where
celebrities or renowned public person as will vouch and endorse the platform to people.

Content marketing: This type of marketing is all about storytelling. ACT will consistently publish
articles, texts, new exciting and developing stories that are related to Real estate development
cycle ,which would generate following among the people interested in engaging real estate Business
. Once the audience is familiarized with the company and its offerings, service sales are anticipated
to follow.

Furthermore, an active blog will be kept on the ACT website, where visitors will be able to read
fresh news and various platform stories. Blog posts will also be broadcasted through ACT social
accounts and vice versa.

Process Workflow
The process workflow is the segment of the business plan where the exact interactions of the
business’ functioning will be graphically presented and explained.
The explanations below will cover the process of how the customers can find and get their piece of
management services via the platform the company offers:
1. The customer browses various management services designs on ACT’s website under different
categories.
2. The customer selects the services they like.
3. The platform lists the available services for the selected catagories.
4. The customer selects the preferred service based on price, the time frame of delivery, or other
customers' reviews.
5. The customer completes the transaction by commit payment (escrow the amount).
6. The company will execute the service (outside the platform) and then deliver it to the customer!

The other method available to customers for obtaining their new favorite piece of managment
services via ACT includes
the following few steps:
1. The customer submits their own managment services idea. They can do so by textual description
or sample proposals.
2. ACT generates project concept and technical drawings for the idea and publishes it under
"Customer-Inspired Design" category.
3. company staffs can view the newly posted design and associate it with their portfolio.
4. Customers get notified if a maker from their country associated the design to their portfolio.
5. The customer can select the maker or the preferred maker (if more than one available).
6. The maker will execute the piece (outside the platform) and then delivers it to the customer!
What is important to emphasize here, is that the costs for transportation, shipment and the delivery
of the management services piece completely relies on the maker that was tasked with the
production of the management services piece in the first place. Exercising this practice greatly
reduces potential delivery costs.

Organizational Management
Act as company emerges with strong Idea, desire and faith combining it with specialized knowledge
in the form of organized plans designed to yield riches by providing real estate management
services. The founders of the company are professionals with specialized knowledge are the first
line staffs which expected to produce marketing inputs in the form organized plans and put in to
use, for definite purpose, through practical plans. The marketing inputs from the founders expected
to have a value of Birr 10,000,000 which can be gained from its application to wards worthy end.
The next phase of organizational staffing will, hiring of experts to help the specialists and manage
day to day activities of the company.so the under below table discusses the required staffs for the
first three years.

Oregano structure
The organizational structure illustrates the business’ management and the team of directorate that
will operate and will work towards achieving success.

CEO

office manager Board of Directors

Auditers

marketing and salesand proporty

proposalandprojectdevelopment permits and approvals constraction managment
managment

Chief executive officer

The CEO is responsible for all major decisions and will oversee all operations and processes within
the business. All team members will be reporting directly to him.
Directorates of Project and proposals design
Project and proposal development team develop real estate development proposals and projects
ranging from concept development until all required documents for project initiation preparation.
The content of the research proposal covers site over view, location ,market and
visibility ,development options analysis ,financial analysis’s, and development of potential and site
plan ,Building and site design
They also help in control quality of submitted proposals and researches from outsourcing partners
and recommend corrections if any.

Directorates of permits and approvals

The Directorate’s designed to become the premier real estate law service provider such as land use,
zoning and local government matters. in the region. It will staffed with knowledgeable experts in
all aspects of the development process, including the site plan, special exception and use permit
processes, zoning, variance and sub division approvals. The Directorates represents developers and
property owners during the construction process, and is experienced in construction and
development coordination and property management at is operation stage.

Directorate of Construction Management

The directorate of construction management serves customers as management agency for their real
estate development management. It will develop bid documents, facilitating in hiring qualified
contractors and supervise the development on behalf of the clients to meet its schedule.

Directorate’s of Marketing and property management

The directorate is designed to lead the sales and marketing of the property of the customers. It will
engage itself on finding the perfect combination of sale space and price, maximizing return while
minimizing risk. The firm is designed ranked in the top 5 of national firms associated with multi-
family sales. The directorate also provides retail leasing, tenant representation, property
management, receivership, and development services for space in shopping center and missed-use
properties.

Organizational staffing

Position Employment starting period Monthly yearly

 statues salary
CEO share holder after six month 30,000 180000
Senior urban planning
specialist share holder day 1 25,000 300000
Business development
specialist share holder day 1 25,000 300000
Real estate law specialist share holder day 1 25,000 300000
Real estate financing
specialist share holder day 1 25,000 300000
IT specialist share holder day 1 25,000 300000
Office manager hired day 1 8,000 96000
It assistant hired after six month 8000 48000
Marketing officer hired after six month 8000 48000
Legal issues officer hired after six month 8000 48000
Customer relation officer hired day 1 8000 96000
after three
Junior architect hired month 8000 72000
Junier civil engeener hired after six month 8000 96000
$2,184,000.
Total 00

SWOT
SWOT analysis (strengths, weaknesses, opportunities and threats analysis) is a framework for
identifying and analyzing the internal and external factors that can have an impact on the viability
of the ACT business venture.

The framework is considered a powerful support for decision-making because it enables the entity
to uncover opportunities for success that were previously unarticulated or to highlight threats before
they become overly burdensome.

As its name states, a SWOT analysis examines four elements:

 Strengths: Internal attributes and resources that support a successful outcome.
 Weaknesses: Internal attributes and resources that work against a successful outcome.
 Opportunities: External factors that the entity can capitalize on or use to its advantage.
 Threats: External factors that could jeopardize the entity's success.

In the spaces below the SWOT explanations and the matrix regarding ACT will be presented.
STRENGTHS
1. Variety of services s in one place – the company service designed to serve
Government ,financial institution’s ,real estate investors in more integrated and value
creating approach .this increases the chances for customers that have different service
preferences to come to ACT’s marketing platform and find the exact service they were
looking for. Wide product portfolios lead to more customers.
2. Large segment of potential customers – ACT’s customers has access to the managment
services showroom 24/7, and are not limited to a single catalog of a single managment
services maker or designer. They can browse with great ease, and make payments for their
desired managment services, anytime in a matter of few clicks.
3. Market value creating professionalism
4. Quality control – the company will abide by official quality standards and will make sure
that the managment services makers ACT does business with, are also upholding a specified
quality requirement during the managment services piece production, as well as after the
piece’s completion.

WEAKNESSES
1. Dispersed segments of potential customers – The Real estate market shows most promise
among the very high income demographic, people living outside of the region. This limits
the potential clientele, since people that are not appearing physically at our office for
company service, might have difficulties navigating through the ACT’s website and
eventually making a purchase.
2. Unavailability of marketing platform and Documents – the drawback of having a potentially
Real estate marketing documents comprising the requirements of its stake holders ,
proposals aimed to attract customers , is that the best in-sector experience the customer can
have with the full picture is via looking at marketing plat form. The lack of clear road map
for real estate investment might turn some potential customers away.
3. Financial short comings to market the company at broad level :

OPPORTUNITIES
1. Government priority for Real estate investment such like for middle income housing
association including Diaspora ,SME cooperatives
2. Positive changes in the market – with the online management services shopping practice
becoming one of the fastest-growing channels of sales in recent years, ACT will tend to that
specific market segment and satiate their demand for a quick and easy way of purchasing a
quality piece of management services.
3. Advancements in AR (augmented reality) and VR (virtual reality) technology, which can be
utilized on the platform – Tech savvy enthusiasts are sure to be drawn to the AR/VR
platform ACT offers. Some might simply come to see how their new favorite piece of
 management services will actually look like in their real rooms, and others (interior
designers) might seek to stay and inquire more about ACT and their extraordinary platform.
4. The lack of this type of service in the Gulf Cooperation Council (GCC) region – the
uniqueness of the platform and the majority of benefits it offers to its customers (online
designs browsing, time-saving, 3D visualization, management services maker selection etc.)
is what makes ACT stand out and provide its customers with carefully and uniquely crafted
products, which are not vastly available in the GCC region at least.

THREATS
Real estate sector in Mekelle was on upturn in the recent periods. The main growth thrust is due to
favorable demographics, and increased demand from the Ethiopian Diaspora, in which prices were
raised highly. However,
1. the local demand side is not enhanced by increasing purchasing power. The Limited
sources of mortgage financing and typical lending terms that are far less attractive to home
buyers are other factors affecting the sector. Required down payments, usually about half of
the home's purchase price, excluded many households from the market. The other factors
are the nonexistence of customer friendly banks & housing finance companies.
2. Lack of competitive and sufficient mortgage market affects the affordability of properties
which also restricts the potential demands and market remains very thin and illiquid. The
state owned Banks has insufficient supply of its loan to the market. Market participants do
not have any choice for long term loan. That is why the cash sales seem usual pattern with
those very few buyers who can finance themselves in some way. Moreover, the sales
pattern in the real estate market mainly has an installment basis; payments are made at
different phases while the houses have been built for the buyers.
3. The market is constrained by inefficient construction techniques, with limited availability
of raw materials, such as cement, steel and other imported construction items, lack of
access to construction financing; and by an extended construction periods. Because of these
common problems, delays in transferring ownership of properties by developers are very
common. The reasons for the delays arise from the side of buyers, developers, red tapes
around government offices, or a combination there of. Additionally, the companies in the
market are constrained not to utilize their optimum capacity, for the main reasons of limited
availability of raw materials, and shortage of potential affording buyers currently.
4. Moreover, the current phenomenon of acute foreign currency shortage in reserve leading to
expensive exchange rates for major currencies is another risk (problem) that cannot be
hedged. This effect escalated the prices of the imported construction materials and the same
is reflected on housing value. On the demanders’ side, the increases in prices affect their
affordability seriously. Because of the shortage, the developers and other traders with
foreign purchase have to wait long in order to get the quota allocation of foreign currency
(which is stated as insufficient allocation). Such delays also affect their operations creating
delays, thus adding to project costs and affect profitability; because of the unnecessary
costs incurred for idle resources (including labor). In addition, companies suffered, as they
 are limited from having wide range of choices for foreign acquisitions of materials
(especially in securing Quality finishing items) to make.
5. Furthermore, prices of the residential properties are highly increasing for a combination of
different reasons. One factor is the above stated inflation factor. There is high concentration
of (active & potential) investors in Mekelle that pushes the prices of lease up highly. The
escalating prices of housing construction materials affects not only for new orders to come,
but for the existing contracts (because all have adjustable contract prices based on
justifiable raw material costs) which affects the ability to pay remaining installment
payments and creates delays or defaults on settlement in which the builders relied up on, for
their finance.
6. The shortage in supply of housing units in Mekelle is because the backlog of demand in
years and also the insufficient current supply. A main reason for the insufficient supply was
that there are small number of developers in the supply side of the asset market and also
small number of potential affording buyers. The slow & inadequate supply of land by the
city administration (especially in getting large plots of lands, which are economical and
manageable for development); was indicated as hindrance not to foster the supply as
needed. In addition, as a result of increased demand for land lease, in (and around) Mekelle,
lease prices are now very expensive. This effect mainly restricts the thousands of licensed
potential entrants. The other reasons stated include the absence of strong housing finance
market to stimulate the demand and also supply.

Risk Analysis

Risk analysis is the systematic study of uncertainties and risks that are encountered in business,
public policy, and many other areas. Risk analysis seeks to identify the risks faced by ACT
business, understand how and when they emerge and estimate the impact of adverse outcomes

The purpose of the risk management section is to look at the weaknesses and threats of the business
more closely, view and assess the risk of failure, as well as provide viable solutions on how to avoid
them, if possible.

The probability of the “risk” occurring will be rated on a scale of 5, with 1 being the lowest and 5
the highest grade. The “risk” impact on the business will be rated in the same manner. When the
risk probability and impact values are multiplied, the total risk value is gained. The total risk value
presents the intensity of the risk it has on the business, where 25 is the highest and 1 is the lowest
value.
Risk Probabil Impact Total Risk
ity mitigation
measure
Lack of clear policy
Guide line for
companies service
in real estate
investment
The slow &
inadequate supply
of land by the city
administration
(especially in
getting large plots
of lands, which are
economical and
manageable for
development
The Limited
sources of mortgage
financing and
typical lending
terms
the current
phenomenon of
acute foreign
currency shortage in
reserve leading to
expensive exchange
rates for major
currencies
Political conflicts
arising in the region
might affect the
consumer base
Low quality Real
estate developers
prices of the
residential
properties are
highly increasing
for a combination
of different reasons
The market is
constrained by
inefficient
construction
techniques, with
limited availability
of raw materials,
such as cement,
steel and other
imported
construction items
lack of access to
construction
financing

Financial Plan

The financial plan is a comprehensive evaluation of a company’s current and future financial health
by using currently known variables to predict future cash flows, asset values, and withdrawal plans.
These metrics are used along with estimates of asset growth to determine if an entity’s financial
goals can be met in the future, or what steps need to be taken to ensure that they are. In the section
below, the financials for ACT will be presented, along with the assumptions which were used in the
makings of this financial model. In our projections, we made calculations for the first five years of
the business’ operations
Assumptions
These are the assumption upon this business model is based on:

 In the first there will not revenue, however in the second and third year the company will
generate revenue birr 6million respectively.
 Technical payment for outsourcing services will be 25% of the revenue
 The salary and administrative expense of the company will be birr. $2,184,000.00
 Payment
 The costs for rent will equate to Birr 20,000 per month.
 Platform hosting will cost ACT Birr 5000 each month.
 Marketing and advertising expenses will run the company 20% of revenues per year.
 The investment in the platform and the web site for project management, marketing and
Database management development will cost around Birr 500,000.

 Lastly, the corporate tax is assumed to 30%.

INCOME STATEMENT
The Income Statement (or Profit &Loss Statement) is the financial statement that reports the
company's financial performance over a specific accounting period. Financial performance is
assessed by giving a summary of how the business incurs its revenues and expenses through both
operating and non-operating activities (direct and indirect costs). It also shows the net profit or loss
incurred over a specific accounting period

years

Total revenue 1 2 3 4 5
18000 72000
Total Revenue 700,000 3000000 6000000 000 000
direct costs
investment on it
equipment’s and 1,000,
managment services 500,000 0 0 000

Total direct cost 500,000 0 0

3,000,00 6,000,00 17,000 72,000
Gross profit of Revenues 200,000 0 0 ,000 ,000
 Indirect cost
1,092,0 2,184,00 2,184,00 2,184, 2,184,
salaries 00 0 0 000 000
560,00 560,00
rent 240,000 240,000 240,000 0 0
administrative and other 18000 72000
expenses 70000 300000 600000 00 00
marketing and sales 36000 14400
expense 140000 600000 1200000 00 000
1,542,0 3,324,00 4,224,00 8,144, 24,344
Total overhead cost 00 0 0 000 ,000
-
1,342,0 1,776,00 8,856, 47,656
EBITD 00 -324,000 0 000 ,000
-
191.714 66.188
EBITD % of Revenues 3 -10.8 29.6 49.2 88889
financial costs
interest 0
100,00 100,00
depreciation 100,000 100,000 100,000 0 0
-
1,442,0 1,676,00 8,756, 47,556
Total EBT 00 -424,000 0 000 ,000
26268 14266
corporate tax 0 502800 00 800
-
1,442,0 1,173,20 6,129, 33,289
Net profit 00 -424,000 0 200 ,200
% 0f revenues 34.051
cumulative profit 19.55333 111 46.235

CASH FLOW
The Cash Flow details the amount of cash and cash equivalents are entering and leaving a company.
The Cash Flow also allows investors to understand how a company's operations are running, where
its money is coming from, and how it is being spent.

-
150000 - 1,173,2 6,129,2 33,289,2
Net income 0 -2,534,000 424,000 00 00 00
 100,00
depreciation 100,000 100,000 100,000 0 100,000
cash flow from investing - 1,273,2 6,229,2 33,389,2
activities -2,434,000 324,000 00 00 00
Bank over draft
loan principle
paid in capital 1092000 0 0 0 0
cash flow from financing
activities 1092000 0 0 0 0
- 1,273,2 6,229,2 33,389,2
net cash flow -1,342,000 324,000 00 00 00
- - -
2,842,0 316600 189280
add beginning cash -1,500,000 00 0 0 4336400
- - -
150000 3,166,0 1,892,8 4,336,4 37,725,6
End cash 0 -2,842,000 00 00 00 00

IRRR 53%
$16,603,813
NPV .70

ACT’s cash flow statement indicates that the business will have a shortage of cash flow from
operating activities during the three projected years of operation, amassing to Birr 2,842,000 in the
first year Birr, 3,166,000 in the second year and Birr 1,892,800in the third year.

The cash flow from investing activities accounts for the costs for the platform and mobile app
development, which will occur in the first year of operations, thus costing ACT approximately Birr
2,434,000.

The net cash flow is showcasing negative values for the projected time period, Birr 1,342,000for the
first year of operations and Birr 324,000for the following year.

The cash at the end of the first year included with the cash of the beginning period will be equal to
13,960KWD, but in the following two years, the cash at the end of the year will record a negative
80KWD and 14,120KWD, respectively.