Contents page

Abstract.......................................................................................................................................................1

1.1. Introduction.................................................................................................................................2

1.2. Review of Background of the study.............................................................................................2

1.3. Review of Statement of the problem............................................................................................2

1.4. Research questions.......................................................................................................................3

1.5. Objectives of the study................................................................................................................3

1.6. Review of Related Literature.......................................................................................................3

1.7. Methodology................................................................................................................................4

1.8. Results.........................................................................................................................................4

1.9. Conclusions and recommendation..............................................................................................5

1.10. References...............................................................................................................................5

1.11. Strengths..................................................................................................................................5

1.12. Limitations...............................................................................................................................6
Abstract
First and foremost, I would like to express my appreciation to the researchers for
selecting such pertinent and feasible topics for their investigation. As a result, I am amazed by
the researchers' adeptness in succinctly describing the entire research body within the abstract
section, utilizing approximately 265 words. The concision and precision exhibited in their
portrayal of the research is truly commendable.

It is obvious that abstract is an informative summary of what the researcher has done and what
he/she found out and includes all bodies of the research. So, in this article, the abstract includes
the objective of the study (assessing the impacts of financial challenges on the real estate
development sector), brief problem statement (high gap between demand and supply of housing
in Ethiopia), summary of the methodology (descriptive research design, purposive sampling
technique, data analysis), major findings (failures to provide houses as per customer consent, low
quality of houses, lack of long term loans and financial sources), key recommendation
(government support through policy framework and regulations, formation of developer
association, public-private partnership), and key words (housing demand and supply, real estate
development sector, financial challenges, impact assessment).
 1.1. Introduction

The article, "Impacts of Financial Challenges on Real Estate Developers in Ethiopia," was
written by Mikiyas Mulugeta Gebreyohannes from the Faculty of Management at Parul
University in Vadodara, India. It was originally published in the Sambodhi (UGC Care Journal)
in 2021, Volume 44, Issue 01, on pages 159 to 164.

1.2. Review of Background of the study

In this part the author discusses the contribution of the real estate sector, including the
construction sector, to Ethiopia's GDP. It mentions that the real estate sector alone accounts for
about 60% of the GDP contribution, while the remaining 40% is attributed to the construction
sector. The article also highlights the development of both components of the sector, boasting a
growth rate of 25% in recent years compared to the average GDP growth rate of 10%.
The author emphasizes the increasing rate of the real estate market in urbanized cities like Addis
Ababa, attracting domestic and overseas investors due to fast urbanization and high demand for
housing. However, it acknowledges that this growth has not necessarily benefited all Ethiopians,
as many still lack access to housing due to delivery issues and high prices. The developers who
received plots often failed to deliver on time as agreed with their customers, which has been a
source of controversy.
In order to address these challenges, the author argues that the real estate sector requires good
and sufficient financial support to make housing development possible. It emphasizes the
importance of easy access to real estate finance in adequate amounts to accelerate the housing
development process. Access to property finance for investors and profit groups is deemed
crucial for ensuring an ample delivery of houses.
Lastly, the author mentions that the price and availability of finance for real estate development
can impact the feasibility of housing projects. This suggests that affordability and ease of
obtaining financing are key considerations in the success of real estate projects.
1.3. Review of Statement of the problem
The author begins by stating that the setback of housing in Addis Ababa is primarily due to the
increasing population and urbanization, which has led to a need for more housing both in
quantity and quality. If this housing problem is not properly addressed, it can result in informal
settlements, homelessness, and negative effects on the local society. The article also mentions
that the current housing needs cannot be met by micro-scale housing cooperatives, the
government, and private households alone and those real estate developers need to play a more
active role in providing more houses.
The focus of the study is on the variable of finance because it is closely linked to other factors
such as industrial capability, timely resource delivery, human resources, and overall company
ability. The availability of finance is therefore considered crucial in addressing the challenges
faced by real estate companies.
1.4. Research questions
The basic research questions of the study are then listed as follows:
 What are the major finance sources for real estate development in Ethiopia?
 Is the finance provided adequately for real estate developers in Ethiopia?
 What are the other main challenges in the real estate sector in Ethiopia?
1.5. Objectives of the study
The objectives of the study are outlined, which include assessing the major sources of finance in
the real estate sector, examining the adequacy of finance in the sector, and identifying prominent
challenges in the real estate sector in Ethiopia.
1.6. Review of Related Literature
In this article the most interesting and attractive work has done because the authors had
clearly discussed the finding of the previous researches. The authors review the challenges of
real estate finance in Ethiopia. The author emphasizes the importance of financing in the real
estate industry for both sellers and buyers. Real estate developers require funding for land
purchase, construction materials, and other building-related activities, while end-users need
finance to purchase new homes, maintain and renovate existing houses.
However, the author points out that the real estate finance structure in Ethiopia is not
feasible, making it difficult to mobilize funds and obtain loans for housing development. The
lack of supplementary financial resources for the real estate sector leads to inadequate funding
for projects, resulting in delays. This shortage of viable and sufficient finance also affects the
affordability of houses and limits market demand.
Furthermore, the article highlights the limited access to credit from banks for housing
loans, as well as the challenges related to collateral and documentation. Additionally, the article
mentions the practice of selling real estate houses on installment plans and the scarcity of readily
available houses in the market.
The author also reviews the impact of the foreign exchange crisis on the real estate sector,
leading to increased costs of local resources. The government's strict financial regulations and
the risk of credit in the real estate segment further hinder the provision of housing finance by
private financial institutions.
1.7. Methodology
The author employed a descriptive research design to provide a detailed analysis of the topic.
The survey was conducted by gathering data from a sample of real estate developer firms that
were representative of the whole group.
The sample size consisted of 63 real estate developer companies, which was approximately 10%
of the total population of registered developers in Ethiopia. The study focused on Addis Ababa,
the capital city, due to the high concentration of real estate firms in that area. The researcher
purposively selected the most active developers that deliver residential and commercial houses.
Data was collected through questionnaires distributed to financial managers of the real estate
companies. In addition, qualitative data was obtained through virtual interviews conducted via
Zoom with two real estate developer companies. The qualitative data was analyzed and
triangulated with the quantitative data.
The collected data was analyzed using descriptive statistics. The use of SPSS version 2018
ensured the scientific rigor and reliability of the study. The results were presented and
triangulated with empirical and theoretical literature.
1.8. Results
The author identifies the following findings
 60.4% of developers finance their projects through loans from different financial
institutions, 23.8% sell shares to raise capital, and the rest use personal and other sources
or collect cash from clients.
 Lack of loans for house buyers is a significant issue, with 79.3% of respondents agreeing
that it is a problem.
 Construction material costs are inflated over time, affecting the financial status and
performance of real estate companies according to 78.8% of participants.
  There is a perceived lack of sufficient long-term loans from financial institutions, with
38.2% and 55.4% strongly believing and agreeing on the issue, respectively.
 The establishment of one financial institution to provide long-term loans for real estate
developers is seen as a positive development, but participants note that it is not enough to
address all the challenges faced by the industry.
1.9. Conclusions and Recommendation
In this article, the researcher concludes that lack of finance, availability of long-term loans, and
high cost of construction materials are the major problems. Some firms are even considering
closing down due to these challenges.
To address these issues, the researcher makes several recommendations.
 Firstly, the government should encourage real estate development banks to provide sufficient
long-term loans for developers. It is suggested that allowing foreign banks to enter the
market might improve the situation, although the current policy favors domestic banks.
 Secondly, rules and regulations need to be revised to create more room for investors in the
sector. Thirdly, real estate developers should expand their target market to include middle
and low-income groups.
 Lastly, stakeholders in the sector should establish their own associations to continuously
assess the finance-related challenges and other variables.
1.10. References
The authors used APA style of reference citation in which author’s last name and
publication year, and title of the work are inserted in actual text of the paper. This style highly
recommended by American psychological association and used in many social studies. This style
eliminates use of footnotes at the bottom of the page or at the end of the paper. The inclusion of
relevant references strengthens the credibility and reliability of the information presented.
1.11. Strengths
The major strengths of this research article are as follows
 The abstract provides a concise yet informative summary of the research study. It includes
the objective, problem statement, methodology, major findings, key recommendations, and
key words, giving readers a clear understanding of the study's scope.
 The author provides well-supported background information, discussing the contribution of
the real estate sector to Ethiopia's GDP, the growth rate of the sector, and the challenges
faced by the industry. This information enhances the context and relevance of the research.
 The article clearly states the research questions and objectives, which are aligned with the
problem statement. This helps guide the research and provides a clear focus for the study.
 The article extensively reviews previous research on the challenges of real estate finance in
Ethiopia. It identifies the importance of financing for both sellers and buyers and highlights
the limitations and consequences of the current finance structure. This thorough review
strengthens the theoretical framework of the study.
 The article employs a descriptive research design, which allows for a detailed analysis of the
topic. It uses both quantitative and qualitative data collection methods, enhancing the
credibility and validity of the study. The article effectively outlines the steps taken to gather
and analyze the data, making it a valuable resource for researchers in the field of real estate
development. The use of SPSS for data analysis ensures scientific rigor and reliability.
 The article presents the findings clearly and aligns them with the research questions. This
demonstrates a clear relationship between the research questions and the findings, enhancing
the overall validity of the study.
 The article provides clear conclusions based on the research findings, highlighting the major
financial challenges faced by real estate firms in Ethiopia.
 The article uses APA style referencing, which is a widely accepted and recommended
citation style in the social sciences.
1.12. Limitations
The major limitations of this research article are as follows:
 The study lacks a representative sample size (only engaged 63 real estate developers in the
capital city of Addis Ababa). This sample size may not be representative of the entire
population of real estate developers in Ethiopia, limiting the generalizability of the findings.
 The study lacks diversity in participants because the study primarily focused on the
perspectives of financial managers and executives of real estate companies. It did not include
other stakeholders such as government officials, buyers, or construction workers, which
could provide a more comprehensive understanding of the financial challenges in the real
estate sector.