Challenges of Private Residential Real Esatate Developments in Alleviating the Housing Demand in Addis Ababa
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Date
2016-08
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Addis Ababa University
Abstract
The study is set out to assess the prospect of current challenges of private real estate development in alleviating the housing demand in Addis Ababa. Hence, it stands to identify the major challenges that the industry is facing and tries to recommend the remedial actions to be taken. Extensive survey of theoretical and empirical literatures made to support the paper with applicable and worth full ideas. Primary data are also collected from the study area using both open ended and close ended questionnaires, structured interviews and by referring to documents and reports of the different governmental institutions. Simple quantitative techniques are used to analyze the data collected. The findings of this research show that the land acquisition for private residential real estate is through auction and negotiation. The large amount of land is stopped for the last decade following the abuse and misuse of resource. Now a days the only option of acquiring land is through auction system to work in joint venture with the previously land that has held as stake holders. Most real estate are admitted the 70/30 land use system, but they are providing only few public service provisions. The sector is highly challenged to the shortage of loan from financial institutions despite the fact that it is highly vulnerable to risk. The developer’s source of finance is the schedule payment system that their clients pay. The sector is also characterized by time and cost overrun caused by lack of financial source, cost escalation of construction materials etc. The high income segment of the society and member of the Diaspora are the main customers of the industry. The middle and low income groups of the society are marginalized by the untouchable cost of houses. Even the industry is not alleviating the real demand of housing that the city is encountered, but it is increasing the housing stock of the city. Finally, in order to enhance the housing problem, the findings suggested that clearly defined and explicit parameters of land issuance system, measures of control time and cost overrun, alternative mechanisms of financial provision scheme, strict reinforcement and incentives to accommodate the marginalized part of the society and the establishment of a concerned institutions recommended as a remedial action to the challenges the industry is facing
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Geography and Environmental Studies