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| Real estate market hit by global crisis |
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| Saturday, 13 December 2008 | |
 By Hayal AlemayehuThe global credit crunch has severely hampered the real estate businesses here, with the diaspora, the main client to the housing development business in the country, hit hard by the financial crises, major real estate operators in the country told The Reporter. Presently, real estate operators hardly find a new customer from the diapora, especially those residing in the United States, while existing clients have failed to settle their payments, according to the real estate operators. “Over 70 percent of our clients are from the diaspora, fifty percent of whom are living in the United States,” said Samuel Taffese, proprietor and managing director of Sunshine Real Estate Plc which last year handed over 166 G-plus-one houses and twenty-six apartments to customers. “The real estate market has failed to secure new customers from the diaspora because of the financial crises.” The prospect for the real state market here will stay uncertain for the near future because the current market mainly targets and caters for the diaspora, according to industrial observers and the real estate operators. “Our existing customers from the diaspora are unable to settle installment payments while new customers from the same venues have almost vanished,” Wondwossen Mezlekia, customers’ service engineer at Gift Real Estate Plc told The Reporter. “The global credit crunch has slashed off about eighty percent of our business as over eighty percent of our customers are from the diaspora.” Actual sales and requests for residential building from the diaspora have sharply declined and may get worse if the financial crises fail to be reversed, according to the real estate operators. “About ninety-eight percent of the over 200 residential buildings we are developing had already been sold out to customers over eight percent of whom are from the diaspora,” Wondwossen said. “Most of the buyers have, however, failed to settle payments on time while the number of prospective buyers from abroad who visit our web site and request our products have sharply declined, which indicate the absence of new customers from the diaspora following the credit crunch.” Foreign real estate operators in the country are also faced with a similar problem. Ropack International Housing Project, a South Africa-based company engaged in real estate development in Ethiopia, is currently unable to collect payments in full amount for the some 360 residential buildings it had erected over the last few years. The company had sold out all the 360 residential buildings it had built (for the prices of the houses are relatively more affordable) but it is currently unable to collect the due payments because the major clients – the diaspora – are not able to refinance the homes they are buying here from the mortgage they secure in the US or Europe as they used to do before the credit crunch turned out worse, according to a marketing manager who used to work at the company. Presently, there are only fifty-eight local and six foreign real estate operators in the country (with a registered investment capital of close to 1.6 billion birr) although over 2500 licenses have been issued over the last fifteen years, according to information obtained from the Ethiopian Investment Agency. |
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