Ethiopia Opens Real Estate Market to Foreign Investors

In a groundbreaking move, Ethiopia has decided to open its real estate market to international investors.

Announced by Prime Minister Abiy Ahmed on March 23, this change ends a long-standing restriction on foreign property ownership.

It’s a key part of Abiy’s plan to invigorate the economy through liberalization and foreign investment, a focus since his 2018 inauguration.

Historically, Ethiopia’s approach to foreign property ownership was cautious, rooted in its past socialist revolution and subsequent control by an authoritarian regime.

This was further influenced by its status as one of the few African nations that remained uncolonized, leading to a guarded stance on foreign economic participation.

In recent years, Ethiopia has sought to open its economy, encouraging foreign investments in sectors like telecoms and banking.

Yet, facing challenges such as dwindling foreign currency reserves, surging inflation, and regional conflicts’ economic toll, Ethiopia is pressed for more radical economic reforms.

Allowing foreign real estate ownership aims to boost direct foreign investment, enhance tax revenues, and invigorate the local property market.

While local developer Solomon Assefa notes potential benefits, especially in the luxury market segment, he questions Ethiopia’s comparative appeal to global investors.

Oromia set to lead in property development

This initiative coincides with the government’s push to develop real estate, including allocating land in Addis Ababa for luxury apartments and planning to construct affordable homes through international partnerships.

However, this development has sparked concerns over the displacement of current residents.

The success of this policy, critics say, hinges on Ethiopia’s political stability and its respect for human and property rights.

Oromia, the country’s largest region, is set to lead in property development, with the ambitious Sheger City project, including a new airport, showcasing Ethiopia’s infrastructural ambitions by 2027.

As Ethiopia dialogues with the IMF and tackles economic challenges, opening its real estate to foreign investors tests its reform agenda and its commitment to a more inclusive and prosperous economic future.