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What will happen in Ethiopia’s real estate market? Will prices go up or down? Is Addis Ababa still a hotspot for foreign investors? How is Ethiopia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Ethiopia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Ethiopia’s rental yields will stay steady as supply and demand balance out
Rental yields in Ethiopia's major cities like Addis Ababa, Dire Dawa, and Bahir Dar have been consistently strong, ranging from 10.0% to 12.7% in recent years.
With the country's population growing by 19% over the last five years, there's a continuous demand for housing. This urbanization trend highlights a significant gap between housing demand and supply, suggesting that rental yields will remain stable as demand continues to grow.
The government is actively working to improve housing affordability by constructing public houses and providing subsidies to private builders. These initiatives aim to balance supply and demand, helping to keep rental yields stable by making housing accessible to more people.
In cities like Hawassa, surveys show that many households spend 30% or less of their monthly income on rent, indicating a stable demand for rental properties. This affordability is a key factor in maintaining steady rental yields.
Ethiopia's economic growth is another positive sign, with GDP expected to rise from 6.2% in 2024 to 6.5% in 2025. This growth fosters a healthy economic environment, supporting the stability of rental yields.
Sources: Tandfonline, Trade.gov
2) Ethiopia’s home prices will rise steadily as infrastructure projects enhance city connectivity
Ethiopia is pouring billions into infrastructure, and it's changing the real estate game.
With ETB203.9 billion ($3.5 billion) earmarked for transport, industrial, and electricity projects in 2023-24, the government is making big moves to connect cities better. This isn't just about smoother roads; it's about boosting property values as these projects wrap up.
Take the ERA – Siyo–Shenen-Guder Road and the ERA – Gode-Hargele: Lot 2 Road Project, for example. These are not just any roads; they're game-changers. Started in 2022, they're set to finish by 2024 and 2025, respectively. Once completed, expect property values to climb in these newly connected areas.
Urbanization is another piece of the puzzle. As Ethiopia's middle class expands, so does the demand for housing, especially in bustling hubs like Addis Ababa. Rising incomes mean more people are looking for homes in well-connected areas, pushing property prices up.
These infrastructure projects are more than just roads and rails; they're pathways to economic growth. As connectivity improves, so does the appeal of investing in real estate in these regions. It's a ripple effect that benefits everyone from developers to homebuyers.
So, if you're eyeing property in Ethiopia, keep an eye on these infrastructure developments. They're not just about getting from point A to B; they're about transforming the real estate landscape. Investing now could mean reaping the rewards later as these projects come to fruition.
Sources: GlobalData, BusinessWire, Mobility Foresights
We have made this infographic to give you a quick and clear snapshot of the property market in Ethiopia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Rents in Ethiopia's major cities will rise as the population grows and housing supply remains limited
Ethiopia's cities are growing fast, with the urban population jumping from 10.8 million in 2002 to 28 million in 2022.
By 2027, expect around 4 million new urban households, and this could soar to 9.7 million by 2037. But here's the catch: the housing supply isn't keeping up. Each year, from 2015 to 2025, the demand for urban housing is about 471,000 units, and it's set to rise to 486,000 units annually from 2025 to 2035.
Despite the booming demand, Ethiopia's housing finance system is lagging. Only 23% of housing is financed through mortgages, with many relying on informal methods like savings groups or family loans. This makes it tough for new housing projects to get off the ground.
The real estate sector is a big player in GDP growth, yet the supply of new homes is limited. The construction industry is underdeveloped, and there's a lack of diverse housing delivery systems. This mismatch between supply and demand is pushing rents up, especially in cities like Addis Ababa.
In Addis Ababa, government housing units are being rented at much higher prices than their original auction values. This trend is a clear sign of the pressure on the housing market.
With a growing population and limited housing, rents in Ethiopia's major cities are set to keep rising. It's a challenging market for potential buyers and renters alike.
Sources: Wikipedia, Housing Finance Africa
4) More foreign buyers will invest in Ethiopia as it becomes a regional business and investment hub
Ethiopia is becoming a hotspot for foreign investment.
In 2023, Ethiopia attracted $3.3 billion in foreign direct investment (FDI), outpacing neighbors like Kenya and Uganda. This momentum is expected to continue, with a target of $3.5 billion by the end of the fiscal year 2023/24. The influx of international companies setting up shop in Ethiopia is a testament to its growing appeal. For example, AMEA Power from the UAE has invested $600 million in a wind power project, and Safaricom Ethiopia has launched a mobile financial services company that's quickly gaining traction.
The Ethiopian government is actively encouraging investment through public-private partnerships and new laws that open up the financial sector to foreign investors. This has made Ethiopia an attractive business hub, drawing in companies like Safaricom Ethiopia. Infrastructure improvements, such as road investments and updates to the ICT regulatory framework, are also making the country more appealing to foreign investors.
International businesses are increasingly choosing Ethiopia as a base for their regional operations. The country's strategic location and growing economy make it an ideal spot for companies looking to expand in Africa. The government's efforts to modernize infrastructure and create a business-friendly environment are paying off, attracting more foreign interest.
As Ethiopia continues to develop its infrastructure and regulatory environment, the number of foreign buyers is expected to rise. The country's proactive approach to fostering investment and its strategic location in Africa make it a prime destination for businesses looking to tap into the region's potential.
Sources: Trading Economics, Addis Standard, PPIAF
5) More low-cost homes will be built due to government incentives for affordable housing
Government incentives are boosting affordable housing construction in Ethiopia.
In recent years, the Ethiopian government has shown a strong commitment to tackling the housing shortage by allocating significant funds for affordable housing projects. For example, the Addis Ababa City Administration has a plan to build 1.4 million units over ten years, which highlights their dedication to increasing low-cost residential properties.
Policies and tax incentives have been crucial in this effort. Agreements with the Commercial Bank of Ethiopia have made it easier for people to buy homes by offering low-interest mortgage loans. These financial incentives have lowered barriers for developers and homebuyers, spurring more affordable housing construction.
Public-private partnerships have also played a key role. The government has teamed up with private companies to build millions of houses over a decade, showing how shared efforts can amplify the impact of government incentives. These partnerships often include initiatives like the National Housing Fund, which aims to make home loans more accessible.
Such collaborations have proven effective, as they combine resources and expertise from both sectors. This synergy not only accelerates construction but also ensures that the housing projects meet the needs of the population. The result is a more dynamic and responsive housing market.
Overall, these strategies are making a real difference in Ethiopia's housing landscape. By reducing financial barriers and fostering collaboration, the government is paving the way for a significant increase in affordable housing options. This approach is not just about building homes; it's about creating sustainable communities.
Sources: Housing Finance Africa, Aparthotel, GlobalData
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6) Ethiopia’s real estate prices will keep rising due to urbanization and population growth
Ethiopia's cities are growing fast, with Addis Ababa leading the charge.
People are flocking to urban areas, chasing better jobs and living conditions. This migration is pushing up the demand for housing, which naturally leads to higher real estate prices. As cities expand, the need for homes becomes more pressing, and prices follow suit.
On top of that, Ethiopia's population is booming, causing big demographic changes. More people means more homes are needed, and this intensifies competition for properties. With everyone vying for a place to live, prices are bound to rise.
The government is stepping in with plans like the Ethiopia Urban Expansion Programme. These initiatives aim to open up new land for development, creating both housing and jobs. While these efforts are crucial, they also underscore the ongoing demand for housing, which keeps property prices on the rise.
Urban development plans are not just about building homes; they're about managing growth. As new areas are developed, the demand for housing remains strong, supporting the upward trend in real estate prices. The government's focus on urban expansion highlights the need to accommodate a growing population.
Overall, the combination of urbanization, population growth, and government initiatives suggests that residential real estate prices in Ethiopia will continue to climb. The demand for housing is not just a trend; it's a reality driven by the country's rapid changes.
Sources: Coalition for Urban Transitions, Statista, Cities Alliance
7) Property prices in Ethiopia will drop slightly in areas hit hard by climate change and drought
Residential property prices in Ethiopia are expected to dip in areas hit hardest by climate change and drought.
In Ethiopia, climate change is reshaping the landscape, especially in regions grappling with severe drought. This environmental shift is causing agricultural productivity to plummet, which in turn affects the economy. The 2024 Ethiopia Climate-Smart Agriculture Investment Plan stresses the need for sustainable farming to tackle these issues. When farming suffers, so does the local economy, often leading to lower property prices.
Migration is another piece of the puzzle. As droughts worsen, people are leaving their homes in search of better conditions. This exodus means fewer people are looking to buy property in drought-stricken areas, which naturally pushes property values down.
Water scarcity is a daily struggle for many Ethiopians, especially in rural communities. The effort to collect water is enormous, contributing to poverty and health problems. These challenges further strain the economy, making it tough for property values to hold steady. Reports from the Ethiopian government and NGOs highlight how climate change is a long-term economic threat, impacting real estate markets.
For those considering buying property in Ethiopia, it's crucial to understand these dynamics. The areas most affected by drought are seeing a shift in demand, which is reflected in property prices. While this might present opportunities for some, it's essential to weigh the risks and potential for future growth.
Sources: Alliance Bioversity CIAT, IOM, American University
8) Ethiopia’s real estate prices will rise moderately as the economy recovers from recent challenges
In Ethiopia, the economy is bouncing back, and this is good news for the real estate market.
As the economy picks up, people generally have more money to spend, which often leads to more interest in buying property. This is especially true in Ethiopia, where the GDP is expected to grow significantly in the coming years. With more disposable income, Ethiopians are likely to invest in real estate, pushing up demand and prices.
Foreign investors are also playing a big role. Ethiopia has opened its doors to international capital, and this influx of money is boosting the real estate sector. When foreign investors come in, they often bring not just money but also expertise and new ideas, which can help the market grow and evolve.
The government is not sitting idly by either. They've rolled out initiatives like the Integrated Housing Development Program, which aims to increase the housing supply. This proactive approach is creating a more dynamic market, where demand is likely to rise as more housing options become available.
With these favorable conditions, property prices are expected to see a moderate increase. The combination of economic recovery, foreign investment, and government initiatives is setting the stage for a vibrant real estate market in Ethiopia.
For those considering buying property in Ethiopia, now might be a good time to explore options. The market is poised for growth, and getting in early could be beneficial as prices are likely to climb. Understanding these dynamics can help potential buyers make informed decisions.
Sources: Trading Economics, Trade.gov
We made this infographic to show you how property prices in Ethiopia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Demand for homes in Ethiopia's major cities will grow as urbanization continues
Urbanization in Ethiopia is on a fast track, with the urban population expected to nearly triple by 2037.
As people flock to cities, the demand for homes in major urban areas is set to soar. By 2043, the rural population is projected to drop to about 66.6%, showing a clear trend towards city living.
The Ethiopian government is pushing urban development to reach middle-income status by 2025. This includes policies that boost economic planning and urban growth, which will naturally increase the need for housing in cities.
With a high urbanization rate of around 5.4% per year, the urban population might even triple sooner, possibly by 2034. This rapid growth is reshaping the landscape of Ethiopia's major cities.
Insider tip: As cities expand, areas once considered outskirts are becoming prime real estate. This shift is creating new opportunities for property investment in these emerging neighborhoods.
Urbanization is not just about numbers; it's about transforming lifestyles and creating vibrant city centers. This trend will continue to drive demand for residential properties in Ethiopia's major cities.
Sources: World Bank, Coalition for Urban Transitions, ISS Africa
10) More foreign buyers will invest in Ethiopia’s real estate as property ownership rules become more relaxed
Ethiopia is opening its doors to foreign property buyers with new regulations easing ownership rules.
Prime Minister Abiy Ahmed's recent announcements are part of a larger plan to liberalize the economy and attract international investment. This shift is a game-changer for those eyeing the Ethiopian real estate market. With the government now allowing foreign ownership, the landscape is set to change dramatically.
Expect the Ethiopian real estate market to grow by nearly 10% annually from 2024 to 2028. This boom is fueled by rapid urbanization and economic growth, making it a hot spot for foreign investors. The new laws mean you can own property without jumping through hoops, which is a big draw for international buyers.
Real estate agencies are already seeing a surge in interest and transactions from international clients. This uptick signals a growing appetite among foreign buyers eager to tap into Ethiopia's market. Compared to its neighbors, Ethiopia's property prices are still considered a bargain, adding to its allure.
For those looking to invest, Ethiopia offers a unique opportunity. The market is undervalued compared to regional peers, making it a promising option for savvy investors. With the new regulations, the barriers to entry are lower, and the potential for returns is high.
As the government continues to ease restrictions, foreign buyers are expected to flock to Ethiopia's residential real estate market. This trend is set to reshape the landscape, offering new opportunities for both buyers and the local economy.
Sources: Trade.gov, Abren.org, Ethiopia Real Estate Market Blog
11) Rental yields will rise in tourist areas as short-term rental platforms become more popular
Ethiopia is seeing a surge in tourism since the peace accord in 2022.
By mid-2023, over 770,000 tourists had explored Ethiopia's rich cultural and historical sites. This influx is a testament to the country's growing appeal, drawing visitors eager to experience its unique heritage.
To keep up with this boom, the Ethiopian government is pouring $34 million into tourism infrastructure, focusing on cities like Harar, known for its ancient cultural significance. These improvements aim to make visits more enjoyable and cater to the increasing number of tourists.
Globally, short-term rental platforms are on the rise, and Ethiopia is expected to follow suit. Travelers are increasingly seeking unique and local experiences, which short-term rentals can provide, making them more appealing than traditional long-term options.
In areas bustling with tourists, rental yields are set to climb as short-term rentals become more popular. This trend is driven by the desire for authentic experiences, which these rentals offer.
Sources: KATA Kenya, Africa Business, Tourism Economics
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12) Property prices in the Somali region will fall because of ongoing political instability
In the Somali region, political instability is causing real estate prices to drop.
Back in 2021, the civil war and military operations disrupted key transportation routes, negatively impacting property values. This disruption made it difficult for goods to move, affecting local businesses and, in turn, the real estate market.
The Afar-Issa conflict has also played a role, with repeated clashes leading to property destruction and decreased buyer interest. When potential buyers see ongoing unrest, they are understandably hesitant to invest in the area.
Many residents are leaving the Somali region due to the instability, similar to what happened during the Tigray conflict. This exodus means fewer people are looking to buy homes, which further pushes property prices down.
With fewer people around, the demand for housing naturally decreases, leading to lower real estate prices. This trend is a direct result of the ongoing political issues that make the region less appealing.
For anyone considering buying property here, it's crucial to understand that the current political climate is a major factor in the declining market. The situation is complex and deeply rooted in the region's ongoing challenges.
Sources: BTI Project, World Bank
13) Hawassa's property prices will drop as people move to the capital for jobs
People are leaving Hawassa for Addis Ababa in search of better job opportunities.
Addis Ababa is booming with job opportunities thanks to its strong economic growth. The city has been growing faster than many other African cities, with an impressive average GDP growth rate of 11.7% from 2000 to 2015. This growth has attracted a lot of high-value service jobs, making it a hot spot for job seekers.
Even though we don't have specific surveys about Hawassa residents planning to move, the overall trend in Ethiopia shows that many are heading to the capital for better career prospects. The economic gap between Hawassa and Addis Ababa is a big factor here, with the capital holding a large chunk of the national economy.
As more people move to Addis Ababa, residential property prices in Hawassa are likely to drop. This shift is driven by the search for better jobs and the economic opportunities that the capital offers. The migration trend is clear, and it's reshaping the real estate landscape in both cities.
For those considering buying property in Hawassa, this could mean more affordable options as demand decreases. The city's charm and potential for growth remain, but the current migration trend is something to keep in mind.
Sources: Migration Data Portal, World Bank, Ethiopian Demography and Health
14) Property prices in rural Amhara will rise slightly as agricultural projects enhance local economies
In the Amhara region, rural property prices are seeing a slight increase thanks to agricultural development projects boosting local economies.
Government investment in agricultural infrastructure like roads and irrigation is a big driver here. These improvements make it easier for farmers to get their goods to market, which boosts the local economy and nudges property values upward.
New agricultural projects are also popping up, aiming to boost productivity and exports. These initiatives not only increase agricultural output but also create more jobs in rural areas. As more people find work, household incomes rise, leading to a higher demand for properties.
Better transportation and logistics infrastructure are making rural areas more appealing for investment. With improved roads, the movement of goods and people becomes easier, making these areas more accessible and desirable. This increased accessibility, along with successful agricultural cooperatives, is a key factor in the rising property values.
These cooperatives are enhancing productivity, which in turn makes the region more attractive for investors. As a result, property prices are gradually climbing, reflecting the economic growth spurred by these agricultural advancements.
In essence, the combination of government investment, new projects, and improved infrastructure is creating a positive cycle of economic growth and rising property values in Amhara's rural areas.
Sources: Land Links
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Ethiopia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
15) Gondar’s home prices will rise as tourism grows and heritage sites are developed
In Gondar, residential real estate prices are set to rise thanks to booming tourism and heritage site development.
The restoration of Emperor Fasiledus's Palace, or Fasil Ghebbi, is a major factor. This project, spearheaded by Ethiopia’s Prime Minister Abiy Ahmed, is not just about preserving history. It's also about creating over 800 jobs, which in turn boosts tourism. More tourists mean more demand for places to stay, and that often leads to higher property prices.
Tourism in Ethiopia has been on the upswing for years. While we don't have the exact numbers for 2023 and 2024, the trend is clear. Gondar, being a key tourist spot, is likely to see more visitors. This influx typically results in increased demand for accommodations, pushing property prices up.
Infrastructure improvements in Gondar are also playing a role. Better roads and transportation make the city more accessible and attractive to tourists. Although specifics are scarce, such projects generally lead to enhanced property values. Local businesses are growing to cater to tourists, which is another sign of the area's rising appeal.
Investors are taking note of these changes. As tourism grows, so does the interest in real estate. The development of heritage sites and improved infrastructure are making Gondar a hot spot for property investment. This is a classic case of supply and demand dynamics at work.
For those considering buying property in Gondar, now might be the time. With tourism on the rise and infrastructure getting better, the city's real estate market is poised for growth. It's a unique opportunity to invest in a place where history and modernity meet.
Sources: ENA, Tralac, ZoomShift
16) Rental yields in Addis Ababa will rise as more young professionals seek rental properties
Rental yields in Addis Ababa are on the rise as more young professionals seek rental properties.
Addis Ababa is buzzing with activity, thanks to rapid urbanization that's pushing up the demand for housing. The city's population is growing, and with it, the need for rental homes. This trend is set to continue as more people flock to the city, especially young professionals drawn by job opportunities. Multinational companies are setting up shop here, and they're bringing in a wave of young talent looking for modern, furnished places to live.
These young professionals aren't just moving to Addis Ababa; they're bringing their wallets with them. With a 15.2% increase in Ethiopia's GDP per capita over the past five years, they have more money to spend. This means they can afford higher rents, which is good news for property owners. Surveys show that many young adults in the city prefer renting to buying, which only adds to the demand for rental properties.
As these trends continue, property owners in Addis Ababa can expect to see rental incomes and property values climb. The city's vibrant job market and influx of young professionals are key drivers of this growth. It's a dynamic environment where the demand for rental properties is only getting stronger.
For those considering investing in property here, it's worth noting that the rental market is particularly appealing to young professionals. They are looking for convenience and modern amenities, which means properties that meet these criteria are likely to be in high demand.
In short, Addis Ababa is a city on the move, with a rental market that's ripe for growth. The combination of urbanization, economic growth, and a young, professional population is creating a perfect storm for property investors.
17) Demand for suburban family homes in Ethiopia will rise as the middle class grows
The growing middle class in Ethiopia is driving a surge in demand for suburban family homes.
With Ethiopia's economy showing resilience, the growth rate is projected at 6.2% in 2024, which is likely to expand the middle class. As more people join this economic group, their purchasing power increases, allowing them to afford larger homes. This economic boost is a key factor in the rising interest in suburban living.
Urbanization is happening fast in Ethiopia, with the urban population expected to triple by 2037. This shift often includes suburban areas, where families are looking for more space. The urban population is growing at 3.8% annually, which signals a strong demand for housing in suburban regions.
Real estate market reports are highlighting a trend towards suburban areas, especially around Addis Ababa. Infrastructure projects, like road expansions and public transport improvements, are making these areas more accessible and appealing to families. This increased interest in suburban properties is backed by real estate agents and developers, who are seeing more inquiries and sales in these regions.
Families are drawn to the promise of larger living spaces and better connectivity. Suburban areas near Addis Ababa are becoming hotspots for those looking to escape the hustle and bustle of city life while still enjoying its conveniences.
Sources: CNBC Africa, World Bank Blogs, Addis Ababa Price Forecasts
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18) Demand for energy-efficient homes in Ethiopia will grow as utility costs increase
In Ethiopia, electricity costs have been skyrocketing, making energy efficiency a hot topic.
By September 2024, electricity tariffs had already jumped by 122%, and they're expected to soar even higher, potentially reaching a 400% increase by 2028. This steep rise is pushing many households to seriously consider energy-efficient options to cut down on their bills.
While there haven't been specific government incentives for energy-efficient home improvements, the Ethiopian Electric Utility is stepping up. They're working on policies like setting minimum efficiency standards and training energy auditors, signaling a growing focus on energy efficiency. As utility costs keep climbing, these efforts are likely to nudge more consumers toward energy-efficient homes.
People are already changing their habits because of these higher electricity tariffs. A 2021 survey revealed that many Ethiopians were taking steps to reduce their electricity usage, like turning off lights and appliances when not in use. However, only a small percentage had switched to energy-efficient appliances back then. With costs continuing to rise, more folks are likely to invest in energy-efficient solutions to save money.
Insider knowledge suggests that as utility costs rise, energy-efficient homes will become increasingly appealing to Ethiopian consumers. This shift is not just about saving money; it's also about adapting to a changing energy landscape.
As the Ethiopian Electric Utility continues to roll out energy efficiency policies, the demand for energy-efficient homes is expected to grow. This trend is likely to reshape the housing market, making energy efficiency a key consideration for potential buyers.
Sources: Shega, Danish Ministry of Foreign Affairs, Capital Ethiopia
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.