3 February 2013

Ethiopia: Habesha's Eyes Land On Rama

The ten storied Tegat shopping centre, located near Axum hotel on Haile Gebreselassie Street, will be part of Addis Ababa's vista, in a year and a half.

Construction firm, Habesha Construction & Materials Development (HC&MD), has selected Rama Construction PLC for the construction of a 10-storey shopping centre at a cost of 123.9 million Br.

The two companies will sign the contract at Hilton Hotel on Monday, February 4, 2013.

The building, named Tigat Shopping Centre, will occupy a 2,100sqm plot next to Axum Hotel, located on Haile Gebreselassie Street. It will be a mixed-use building, hosting shops, offices and a four star 90-bedroom hotel.

The total cost for the centre's construction, of which Rama will only handle structural works, currently stands at 233 million Br.

Tigat Shopping Centre belongs to shareholders of the company by the same name, which was set up nine years ago. Realising that the area where their shops were located was designated as a development area, six people came up with the idea of developing the land themselves.

They brought in an additional 10 people and formed the company with a capital of 9.6 million Br, according to Yelebe Molla, board chairman of Tigat, who has previously worked at both the Development Bank of Ethiopia (DBE) and the Commercial Bank of Ethiopia (CBE).

Tigat then entered into a joint venture (JV) agreement with HC&MD, whereby the latter would manage the project, including handling the design, building and sale of the space, on a profit sharing basis, in October 2011.

Later, after five shareholders left the company, Habesha, which is involved in real estate development and production of construction materials, bought a 40pc share in the company, becoming a major shareholder.

Habesha has leased 1,067sqm of land independently, since its establishment in May 2010, whilst developing 64,840sqm of land with other companies in partnership. It has apartment sites in Ayat and Kirkos District, and has so far sold 349 houses and 25 shops for a total of 386 million Br.

The design for the building was done by Shigez Consulting, a Chinese based company, for a fee of around 480,000 Br. The building itself will have two basements, a ground floor and a mezzanine, in addition to the 10 storeys. The hotel will be located in one wing, starting from the fourth floor.

Rama is expected to finalise the structure of the shopping centre within a year and a half.

The project will be among many that Rama Construction PLC, one of the top grade contractors in the country, engaged in road, industry, real estate and building construction, is involved in. Its recent projects in Addis Abeba, include the 7.5 million dollar expansion works for the United Nations Economic Commission of Africa (UNECA) and the construction of Odda Tower, a mixed-use building across from Zemen Bank, on Tito Street.

The company has already sold 45pc of the total space, according to Eskinder Desta, managing director of Habesha Construction and the person behind its Parent company, Habesha Capital Services PLC, which also has a share in Habesha Cement and Habesha Brewery share companies. Without considering the hotel space, for which HC&MD is negotiating with an undisclosed group, 75pc of the space has been sold, according to Eskinder.

The current cost of buying shops in the first three malls is 350,000 Br. Offices cost more, with a starting price of 750,000 Br for a 50sqm space.

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