Unethical practices and lack of regulations plague Ethiopia’s real estate industry
Just two weeks ago, I received a call from a close friend of mine who was in a state of alarm. He informed me that he had been contacted by a real estate company in Addis Ababa, urging him to immediately purchase a house due to an imminent devaluation of the local currency by the government. This news, which later turned out to be false, left me both astonished and bewildered.
Concerned about the authenticity of this information, I took it upon myself to verify its accuracy. I reached out to my trusted sources, including senior journalists, all of whom confirmed that the news was indeed baseless.
However, during this process, I discovered something troubling. The real estate market had already adjusted its prices based on the false claims of currency devaluation. This deceptive act had the potential to create speculation in an already troubled market that was grappling with a severe shortage of foreign exchange.
This incident was not an isolated case but rather indicative of a larger issue within the real estate industry. It is disheartening to witness how some companies and their staff engage in unprofessional and avaricious activities. They prey upon the aspirations of the middle class, pushing them into lower socioeconomic brackets and, tragically, even driving some to the point of suicide after placing their trust in the promises of these salespeople.
For the salespeople, their primary focus is on the number of buyers they can bring in. However, for the buyers, it is about turning their dreams into reality after years of diligent saving and hard work.
Regrettably, the real estate sector in Ethiopia remains largely unregulated. As long as a company possesses some land or a small building structure to showcase, they have the freedom to sell as much housing as they desire, without any rules or regulations to prevent them from deceiving the public.
This distressing reality becomes evident when walking through neighborhoods such as Bole, where real estate salespeople aggressively target those they perceive as financially capable, enticing them with mouth-watering offers.
The real estate industry holds immense significance for individuals and families seeking to fulfill their dreams of homeownership. However, the absence of robust regulations and unethical practices within the sector have raised concerns about the well-being and financial security of buyers. In order to safeguard the interests of buyers and maintain the integrity of the real estate market, it is imperative to address the issues through a comprehensive approach that involves buyers, regulatory bodies and industry stakeholders.
Buyers should be encouraged to exercise caution and conduct thorough research before making any real estate transactions. This includes utilizing various sources of information, such as online platforms, public records, and professional advice. By seeking guidance from industry experts, independent property valuers, and legal professionals, buyers can gain insights into market trends, property values, and potential risks. This knowledge equips them to make informed decisions and mitigate the chances of falling victim to fraudulent practices.
The prolonged delay in approving the draft real estate law has also allowed unscrupulous practices to thrive, leaving buyers vulnerable to fraudulent activities. Without clear regulations and enforcement mechanisms, the industry lacks the necessary safeguards to protect the interests of buyers and ensure fair and transparent transactions. This inaction perpetuates an environment where unregulated real estate companies can operate with impunity, jeopardizing the trust and financial security of buyers.
To foster trust and protect buyers, it is thuscrucial for governments and regulatory bodies to enact and enforce comprehensive real estate regulations. These regulations should encompass licensing requirements for real estate agents, stringent disclosure obligations, and mechanisms for dispute resolution. Additionally, the establishment of an independent regulatory authority with the power to investigate complaints and impose penalties on violators would serve as a deterrent against unethical behavior.
Real estate companies and professionals can also play a pivotal role in shaping the industry’s reputation. It is essential for them to uphold high ethical standards and prioritize the interests of their clients. This can be achieved through the establishment of self-regulatory bodies that set and enforce codes of conduct. By adhering to ethical guidelines, real estate professionals can build trust, enhance their reputation, and contribute to a healthier and more transparent marketplace.
Transparency is a cornerstone of a well-functioning real estate market. Governments should promote transparency by implementing measures such as standardized contracts, comprehensive property registries, and publicly accessible information on property valuations and transaction history. Furthermore, requiring real estate companies to provide clear and accurate information about properties, including their condition, legal status, and potential risks, is crucial for informed decision-making by buyers.
(Zelalem Tamir is an economist by profession. He can be reached at [email protected].)
Contributed by Zelalem Tamir