13 January 2013

Ethiopia: Record Prices for Condo Shops

Addis Abeba Housing Development Projects Bureau has earned 284.8 million Br from the sale of condominium shops, in Lideta, in a process that had bidders offering more than eight times the floor price.

The bid opening at the Arat Kilo Sport and Gymnasium Centre, on December 8, 2012, for the Bureau's offer, on October 30, to sell 150 shops, ranging from 20sqm to 117sqm, attracted 14,000 bidders. The Bureau subsequently announced 149 successful bidders, on Saturday, January 5, 2013.

The bidders will pay 50pc of the 284.8 million Br in advance, with the balance to be paid through the Commercial Bank of Ethiopia (CBE), with interest, over the next five years.

The record breaking offer, that beat last year's 15,000 Br for a square metre, was 56,164 Br, or a total of 1,123,280 Br, for a 20sqm shop. The lowest offer was 12,630 Br, for a 93sqm space.

The 56,164 Br offer is almost equal to prices charged for apartment buildings in Beijing, one of the most densely populated and developed cities in the world, and also the ninth most expensive. The price per square metre for an apartment, within the city, is around 3,400 dollars, whilst those outside fetch approximately 2,400 dollars.

The highest offer came from an individual who also won a further five shops, for a total of 4.3 million Br. Abyssinia Bank and Horn of Africa Shipping Lines each acquired four shops, whilst Addis International Bank and Kuraz International Publisher Plc bought three shops each.

The floor price for the bid was 6,660 Br.

The buildings cost 3,300 Br a square metre to build, according to Yidnekachew Walelign, head of the Bureau.

"Recently the price of condominium shops is increasing, but it still is not enough," said Yidnekachew, adding that the revenue would go to the city's finance and economic bureau, through an account at the CBE. Despite the high prices, the buyers could make a profit, in the short term, depending on the businesses they open, or even simply through rental income, according to Biruk Melaku, a lecturer at the Addis Ababa Institute of Technology (AAiT) and manager of Tekton Consulting Architects and Engineers.

"But they will lose in the future," he says, "because the value of the shops will decrease as more shops become available in the future."

"The price for shops and houses in the city is still booming, but not on a level with the economy's growth," he added.

"Having seen shops in Europe, the Lideta shops do not match in quality only in price," said Yonas Haile, deputy manager of Breeze Consultancy Plc, which works in the area of design, construction and cost estimation. "The government should focus on development of all infrastructure in the city, so that the businesses will be diversified and people can get alternative prices," he added.

Bidders offered eight times the fear price for condominium shop in lideta

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