The Challenges of Financial Impacts on Ethiopian Real Estate Developers

Abstract

Because of the migration of people from rural areas to urban areas, there is a significant disparity between the demand of housing that is needed and the amount that is available in Ethiopia, notably in the nation’s capital. This makes it possible for a large number of real estate developers to put some of their capital into the sector. By interviewing sixty-three real estate developers in the country’s capital, Addis Abeba, the primary purpose of this study is to determine how the real estate development industry is being affected by the current financial climate. The study used a descriptive research methodology in order to collect specifics and provide an explanation for the phenomena. Additionally, the researcher used a purposive sample strategy based on the years of operational experience had by the developers. The information that was gathered was organised into tables and then subjected to an analysis in which it was triangulated with previous research and published works. The primary effect of the industry’s ongoing financial difficulties is a failure to provide houses in accordance with the customers’ agreements, which in turn results in a decrease in the overall quality of the houses that are built at the conclusion of the project. These issues are the direct result of a shortage of long-term loans and other types of financial sources. According to the data, the majority of developers need work from the government in the form of a policy framework that includes rules. Since the real estate sector accounts for 12 percent of Ethiopia’s gross domestic product, the government is obligated to pay attention to it for economic reasons. In addition, the sector is responsible for the direct and indirect employment of workers. In order for developers to be more effective in their work, they have banded together to create associations, which they use to handle issues that arise within the business. At this time, there are many developers in the country, particularly in the nation’s capital. Their final purchasers are high income segmentation clients; thus, in order to lessen the demand for housing, the public private partnership has also been recommended by the researcher.