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The impending change on foreign property ownership marks a seismic shift. It’s part of Abiy’s larger economic reform agenda to liberalize key sectors of the Ethiopian economy.
But the policy is also an attempt to tackle a short term problem. The government believes foreign property ownership may generate more international investment for Ethiopia, and enable authorities to raise taxes, while also generating competition to revive the local private real-estate market.
“I think it has the potential to bring much needed forex into the economy,” Solomon Assefa, a local property developer, told me. “The luxury segment is already saturated and can use foreign buyers, but I don’t think Ethiopia is attractive enough for foreigners to procure houses compared to destinations like Dubai.”
Much of Ethiopia’s attraction for foreign investors will stem from cheap labor and the state offering subsidized electricity.
The foreign ownership move helps to explain the government’s rationale for providing prime city-center plots for construction of luxury apartments. Property throughout the capital, Addis Ababa, has been allocated to real estate developers over the past year. As part of allocation agreements, private developers will reserve 30% of new housing units for a public-private partnership with the state.
In January, the finance ministry floated an international tender seeking partners to construct over 78,000 affordable housing units in Addis Ababa in the coming years. The government plans to raise funds through auctions. Widespread demolitions have been carried out in the capital to make way for those investments. And that’s a sign of what may lie ahead. Ethiopians who end up being evicted to make way for auctioned properties stand to lose the most as the new policy is rolled out.
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This article was originally published by a www.semafor.com . Read the Original article here. .