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.
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.
• 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.• 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.Conclusion:
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