Addis Abeba:
Is the Exuberance on Property and
Real Estate Boom a Prescription
for a Meltdown?
Public Lecture -
Respublica Literaria XXII, MMVIII
Costantinos
Berhutesfa Costantinos, PhD
Professor of
Public Policy, School of Graduate Studies,
College of
Business and Economics, AAU
The most important factor driving estate
development and rental rates is on the demand side: income. We have witnessed
a growing number of rich people (although still in the minority) who want to
live in only a few metropolitan areas, primarily those on the Bole; displacing hitherto wealthy underclass of the past regime. In addition to increasing demand for pricier homes, supply of new homes has been constrained. Focused on
supply and demand factors for the rise of residential real estate prices, we
turn our spotlight on speculative investor sentiment. Since the early 1990s,
the rate of growth for housing prices has risen every year. This has created an
investor psychology in the nouveau riche millionaires that crowd the trendy
cafés and pubs of Addis and the raw meat alleys of Nazareth. For many Addis
Abebans the real estate market has been the latest get-rich-quick in-thing.
Indeed, a multitude pack of homeowners and investors have become wealthier as
they watched their estate values increase or their investment properties sell
for multiples of what they paid for them just a few years ago.
Nevertheless,
the run-up in real estate especially office buildings may be ending and the
housing market's “extraordinary boom” may collapse as it has historically done
in the infamous Florida Real Estate Craze. Indubitably, this will herald the
transition from urban government to urban governance: two diametrically
opposite approaches in urban administration and decision–making systems. Urban government comprises city management on official state authorities. Urban
Governance, on the contrary, is a process based on the interaction between
official organisations and authorities, which lead city development on the one
hand, and of the civil society or the public domain on the other.
Key words: urban government, urban governance,
real estate meltdown
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Addis view from Sheraton pool
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See talk here
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