Assessment of Private Residential Real Estate Development: The Case of Addis Ababa City

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Addis Ababa University


The purpose of this study is to analyze the existing nature of real estate development in terms of existing real estate regulations/directives, house production determinants, houses' affordability, house and residential pattern and developer's construction practice. The study selects this research area because of two main reasons: - The real estate sector is newly growing & economically very important sector in one hand and on the other hand, as a new business little is known about the sector due to the absence of researches and studies in the area. 16 developers are selected out of 124 registered and 64 active developers operate private real estate houses development in the city. The research has selected 25 % of the developers, 16 developers by using both purposive and proportional stratified sampli ng techniques. Purposive sampling has been used in order to include potent ial and senior developers deliberately whereas stratified proportional sampling used to give the proportional chance of selection of developers at different sites and sub-cities according to their representation in the total population. Questioner, interview, desktop study, and observation were employed for the study. The findings of this study has revealed that real estate developments in the city produce high quality houses which are affordable only for an especial social group like Diaspora, businessmen, international NGO employee. It also found that there is high degree illegal form of development in the sector which can be expressed in form of informal construction of service type houses, sell of vacant land, illegal land occupation, default to pay lease payment and transfer houses with out capital gain tax (sa les tax) and construction on illegal settlements. This study has also fo und that the sectors sustainability is under question due to lack of construction material and fin ance in one hand/ suppl y side of the market/ and un affordability of houses for the majority of the ci ty's residents in the other hand/ demand side of the market/. In order to ensure sustainable development of the sector the fin ancial and construction sector of the country should expand and support the development of the real estate industry. It is also recommended that government should make regulatory reforms to relax the house construction cost where as developers should consider the lower and middle segment of the market rather than focused only on the higher section of the society.



Residential Real Estate, Development