With prices for shops at the bottom of condominiums is at an all-time high, the offers individuals make for them are becoming unattractive compared to banks and companies who offer three times more. The higher offers benefits brokers and real estate companies, reports YARED TSEGAYE, FORTUNE STAFF WRITER.
For a developing nation such as Ethiopia, Hana Alemu’s offer for one square metre of space inside a condominium cannot be considered frugal. Her bid is over 55pc higher for a floor price of 9,000 Br for one of the condo shops under the middle-income housing scheme in Bole Arabssa.
A private firm that she had never heard of outbid her though by offering a price which she heard was around 10 times her offer. The 26-year-old civil engineer’s dreams of one day owning a supermarket have since deemed as the prices are out of her league.
“There was nothing I could have done – my offer was too unattractive,” Hana says.
She remains optimistic though, where she expects to have her heyday in rounds when the shops are handed through lottery prizes.
The Bole Arabssa case is not isolated. Six-figure offers have become common in the capital’s housing schemes, with 171,000 Br for a square metre being the highest to date.
The Addis Abeba Saving Houses Development Enterprise (AASHDE) is the authority mandated to sell and transfer homes and shops that are constructed under the middle-income housing schemes. The price list differs from district to district. This can be witnessed in the first round of bids for the middle-income housing schemes in Lideta and Aqaqi-Qality where 1,292 houses were transferred, out of which 320 were shops.
For condo-shops in the middle-income housing scheme of Lideta, the maximum offer was 51,560 Br a square metre. Aqaqi-Qaliti District‘s highest offer stood at 115,001 Br and 171,000 Br for the Crown and Sengatera sites, respectively.
This phenomenon is helping the brokers such as Lulit Tilahun who operates in Yeka Abbado.
“I have witnessed a 71Sqm shop sell as high as two million Br to third parties after the bid winner finishes payment on it,” she told Fortune. “This means a square metre selling as high as 28,000 Br.”
This is for an area where the average price for a square metre of a shop is a little over 10,000 Br.
Awash International, holds the record for the highest offer, standing at 51,560 Br for a square metre for in commercial speace a middle lower income condo shops at Yeka Abado.
Aside from banks, individuals have made high offers. One of the highest ever given is by Selamawit Kahessay who has won, offering as high as 171,001 Br for a site in Senga Tera.
The auction for the site was delayed to attract more participants, and upon the request of investors, according to one of the site’s top supervision team members since 2017.
The site has five blocks from which 110 condo shops have been put on sale by the Enterprise in early April. Before the latest auction, the state giant, Commercial Bank of Ethiopia (CBE), requested and got the green light from the Enterprise’s board for 11 shops to be reserved.
“The condo shops serve various purposes some want restaurants and others supermarkets,” says Yohannes Abayneh, communications head of the Enterprise. “Each shop creates job opportunities for at least three people.”
For the condo shops of the middle-income housing schemes, bidders pay the entire value of the property in cash. For the middle-lower income schemes, a down payment for 50pc of the value of the shop is necessary while the rest can be settled in half a decade’s time.
Despite individuals and private firms that give high offers, commercial banks prominence in these auctions is evident.
The highest offer belongs to Oromia International Bank (OIB), at 171,001.5 Br a square metre for a shop in Snega Tera. The offer was eight times the floor price.
“How can we accommodate our growth with the increasing rental fees, which, exclusive to banks, are between 700 Br and 1,000 Br a square metre,” asks Abe Sano, president of OIB, justifying the brick-and-mortar investments by his bank.
Abe hopes for the construction of the headquarters of the bank in Goma Kuteba to begin by next year.
“As a financial institution, we also need our services to reach customers by opening new branches in locations such as the Crown Site,” Abe told Fortune.
Ethio-Life General Insurance is another financial institution that was able to win a shop at the Senga Tera site. The firm offered 83,505.95 Br for a square metre of the shop. There is now notice for rent for the 86Sqm shop with the rental price tagged of 400 Br to 500 Br a square metre.
It is not just the Enterprise that is offering condo shops, private real estates are also taking part.
Ayat Real Estate sells apartment shops within the range of 30sqm to 100sqm for fixed prices that can be as low as 31,878 Br and as high as 60,000 Br. These vary with the geographical locations of the sites, which are located in Kazanchis, Sealite Mihret or Ayat. A quarter of the price of the shops is prepaid. Gift Real Estate also sells its apartment shops for a fixed price of 36,000 Br a square meter, which range between 17Sqm to 48Sqm.
“This is a free-market model; no one is to be blamed. Whoever offers the highest price wins,” Dagmawit Moges, Addis Abeba City Administration spokesperson, told Fortune, explaining the higher price tags of condo shops offered by the Enterprise relative to private real state firms. “The price offers should not be surprising, as we have witnessed them go as high as 200,000 Br before at the Lideta Melso Malemat site.”
Yohannes of the Enterprise also claims that the Enterprise has not benefited from the higher prices stating that the cross-subsidy costs are even higher than that.
“We spend much money for infrastructure development and administrative issues,” he said refraining from disclosing the value of such expenses.
The City Administration already has housing projects in the pipeline at Bole Bulbula, Beshale, Gerji, Megenagna, Meri, Semit and Asko, giving the likes of Hana Alemu hope.
In the second phase of the middle-income condominium housing project, the Enterprise is constructing 38,886 housing units. Over 17,700 of these are almost completed and will be inaugurated by the end of this year, according to Yohannes. The rest are under construction phase, having reached 80pc completion. For the past 12 years, the government has constructed and transferred close to 175,000 homes in Addis Abeba.
The Enterprise has obtained 38ha of land in Bole District from the City Administration for 8,428 homes inside 54 buildings. It is expected to be completed within two years’ time of the commencement offer project.
“If land continues to be monopolised in such a manner, the government must enforce a regulated progressive tax on properties with a proper registration system,” says Baymot Tsegaye, an architect with two decades of experience in the sector. “If lower income groups are to benefit from public projects, then there must be a system that can make them winners too.”
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