Friday, July 19, 2024
BusinessAddis Ababa approves largest private housing project to address housing demand

Addis Ababa approves largest private housing project to address housing demand

It costs 450 billion birr

Addis Ababa’s City Administration, through its 70/30 public-private partnership scheme, has approved construction of what will be the largest private housing investment in the city’s history – a 450 billion birr housing project by Ovid Group. Land is slated to be allocated in the coming days to the contractor free of lease payment.

The Administration has registered over one million applicants waiting for housing, but through its low-cost housing program it delivered only around 200,000 units over 13 years – barely 20 percent of the target. At this pace, satisfying total registered demand may take 50+ years.

Facing this failure, officials turned to an alternative – the 70/30 public-private partnership scheme. Under this model, private developers fund and build 70 percent of housing units for sale while giving 30 percent to the government for low-income residents.

The new project aims to address Addis Ababa’s growing housing shortage and meet residents’ demands.

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City officials selected 68 local and foreign companies to develop housing complexes, including Midroc Investment Group, Ovid Group, Flintstone Homes, Eniy Construction, and Gift Real Estate.

Ovid Group will construct 60,000 of the 100,000 planned units on a 460 square meter plot in Bole Bulbula, set to obtain the land next week.

Funding sources for the complex include Ovid Group’s partners, foreign loans, certain domestic loans, institutional sales, and contributions from the Diaspora. Ovid also plans to establish a Mortgage Bank.

The company received the land free of lease payments. In exchange, Ovid will retain 70 percent of the units for sale while handing over 30 percent to the government. Ovid is offering 70 percent of its shares for sale to finance construction.

The city has earmarked 350 hectares of land for the housing projects under the public-private partnership scheme. Ovid Group partnered with 65-year-old German firm Kling consulting for the project.

Under the 70/30 scheme, developers fully fund projects. If critical resources like electricity, water and construction materials are lacking, developers must secure them with priority access.

OVID stands for “Our Vision is Development” in Amharic.

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