From Marcopolis

The number of population living in the urban areas has doubled within a decade. It has increased from 4.3 million (11% of the total population) in 1984 to 11.9 million in 2007, which represents 16.1% of the total population according to the 2007 population census. This figure is projected to rise to 18.3 million by 2017. The population in urban areas grows by an average of 4.3% which is almost twice faster than the growth rate of the total population in the urbanities (2.6 % p.a.).

Apart from that, the government builds houses mainly for the low income earners. This has created a fertile ground for the private sector to engage in the construction of real estate development which is for middle and high income earners.

“With increased income, construction in housing usually expands in a cyclic [spiral] way. Even in structural terms, when the employment structure of an economy gradually changes from a rural economy into an urban economy, the possibilities of the business in housing are unlimited. In that sense, we have always tuned our construction business to focus on buildings and actually we have become well-known throughout the country as well as abroad once we moved into the real estate business,” explains Tsedeke Yihune, owner of Flintstone Engineering, one of the largest construction companies in Ethiopia.

Gift Real Estate development in Addis AbabaThe increasing number of emerging middle incomers has, on the other hand, increased the demand for real estate development. A 2010 study by the Africa Development Bank (AfDB) shows that Africa’s middle class has increased to 34%, an increase of 27% from the 1980s. Ethiopia is not considered to be an exception even though the figure varies from one country to another.

According to a recent survey conducted by the Paris-based consulting firm Sagaci Research, which considered about 1,000 households in Addis Ababa, the middle income households in the city reached more than 20%. Though there is no concrete data available, the population of Addis Ababa is thought to be more than 6 million.

Given that the government cannot address the need for the increasing demand for real estate on its own, it allowed a number of local private investors to become the major actors in the development of real estate in Ethiopia.

Written by Bewket Abebe | Read more at Marcopolis