Borkena
Toronto – Ethiopia’s Real Estate Industry is reportedly facing challenges of related to under supply of loans. A report by DW Amharic, on Monday, said developers are not getting adequate loans from private banks.
Ethiopia’s Real Estate Developers Association is cited as saying the decrease in the construction of houses and the market is related to the loan supply problem. The Association was established about two months ago, according to the report. There are between 100 and 150 developers.
Alemayehu Ketema, president of the Association, is quoted as saying that the market in the sector is not balanced. The demand for housing in the country is very high but the number of developers is small.
It is emphasized that the problem is related to the supply of loans. DW Amharic cited a developer, whose name is undisclosed, who is reportedly building 1000 houses as saying that he was not even able to get ” 2 billion birr loan for 11.5 billion birr project.” He complained that the value of real estate is greater than the export sector and the manufacturing sector. “The private banks never grant loans,” the developer added.
The issue has been raised at the Ethiopian Parliament when the minister for finance, last week, tabled the budget for next fiscal year. Restriction on cash supply in the market seems to have contributed to the problem. The measure was taken on the part of the government to control inflation.
There is also a tendency to believe that the rise in the price of commodities has caused shortage of cash and sectors like the real estate were affected badly.
According to the report, the housing market in the capital Addis Ababa is slow at this point. “If the price is reasonable, people will buy. Because the price is high the purchasing capacity decreases,” Alemayehu is quoted as saying.
Apart from loan supply issues, there were issues in the real estate sector. There have been complaints in the sector related to not completing houses within a time indicated in the contract and soaring prices of houses from time to time. There were also cases whereby developers failed to start construction after collecting money from buyers.
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