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Close to the outskirts of Addis Abeba, in Samit Woji, a few kilometres
away from CMC Road in Bole District, Kebele 14/15, a
vast piece of land is filled with plots at various
stages of construction. Barren plots of land are
mixed with ones that have foundations, with rusted
reinforcement iron bars sticking out.
The Addis Abeba City Administration leased most of the land in this
district, as well as three others, to companies and
individuals en masse in 2005 and 2006, to encourage
real estate development.
Yet, the Land Administration and Construction Permit offices of Bole,
Yeka, Nefas Silk Lafto, and Kolfe Keranio districts
were instructed to reclaim plots of land on which
construction has not yet started, in a letter
written by the Land Allocation Authority of the
city administration, which is unhappy about the
stage of development the land is in after five and
more years.
More than one million square metres of plots leased to 34 developers
are to be taken back, the lease contracts
terminated, and the deeds collected or invalidated
within 15 days, according to the letter the
authority wrote on July 29, 2010.
Gebremichael Markos, Getachew Wolde, Castile, Home Sweet Home, and
Elias Abamilky, with, 50,000sqm, 47,999sqm,
30,000sqm, 25,000sqm, and 6,940sqm plots,
respectively, all in the Samit area, are among the
many that are to lose the plots leased to them,
according to the letter.
With the exception of Castile, which signed its lease 14 years ago, all
acquired their respective plots only five years ago.
Teklebrehan Ambaye, owner of Teklebrehan Ambaye Real Estate, with
50,000sqm; Haile Gebrselassie and his wife, who own
Haile and Alem Real Estate, with 40,000sqm; Yemiru
Nega, owner of Yencomad Plc and a major shareholder
of Dembel City Center, with 50,000sqm; and Star
Business Group, with 50,000sqm; are also likely to
lose their plots in the Bole District.
A total of 716,536sqm in Bole and 174,318sqm in Yeka districts are to
be reclaimed in addition to 50,000sqm in Kolfe and
82,700sqm in Nefas Silk Lafto.
While some of the 34 developers whose land has been reclaimed have
already started construction, most are still at
foundation level. For many of the developers who
claim to have started construction, the letter from
the city administration was a big surprise.
There are many reasons for the delay in construction, according to the
developers, who mostly blame the city administration
for contributing to the delay by failing to provide
adequate infrastructure, such as water supply.
“I have been transporting the water I needed for the construction from
other places,” said one of the developers, whose own
48,000sqm plot was among those listed to be
reclaimed.
Roads and electricity were also in short supply to the development
sites. He had already started the foundations and
even the building but was not able to continue the
construction because of the road construction that
was going on near his site, the developer said.
Late delivery of plots of land, lack of basic infrastructure,
procedural problems, and problems with residents
occupying the plots, are some of the reasons they
cite for their delay in starting projects.
“Although the lease was signed in 2005, the plot was only delivered to
me in 2008 because of the people who had to be
relocated from the place,” said an anonymous
developer.
He claimed that his lease contract was redrawn as part of his plot was
used for road construction but city administration
officials are hardly convinced by the complaints of
the developers.
“There are developers who constructed and developed their plots despite
the absence of basic infrastructure and some
provided infrastructure like roads themselves,”
Kassim Fite, manager of the Land Administration and
Construction Permit Authority, told Fortune. “The
entire lease contract with the developers does not
mention infrastructural barriers as reasons not to
develop the plot they have taken.”
To solve the city’s land issues, the administration, which conducted a
study of the situation in the capital during the
last fiscal year, established a taskforce to improve
its operation. In seven of the 10 districts, 125
real estate developers with around 550ht had a
performance of only 14pc, according to the study.
The report by the taskforce was disappointing, according to the city
administration, resulting in its move to reclaim a
total 1,023,554sqm of land from real estate
developers to the land bank. The city plans to lease
the reclaimed plots in the 2010/11 fiscal year.
Pictured on the right, is the
3,637sqm plot belonging to Beritu Plc, located near
Desalegn Hotel. It is one of the 34 plots the city
has reclaimed.
“Currently, the administration has terminated lease contracts for more
than 60ht of plots from developers and it will
continue until it gets back all the plots that are
undeveloped,” Kassim told Fortune.
Most of the real estate developers among those whose land have been
reclaimed are in the Bole and Yeka Districts. One
such a plot in Bole, Kebele 03/05, is leased by
Beritu Plc, which has 3,637sqm land located in front
of Desalegn hotel on Cape Verde Street. Beritu
acquired the land from Laura Trade and Industry
which originally leased the land from the city
administration.
“There were 58 kebele houses and one warehouse belonging to the idir on
the land when we received it,” said the developer,
who also requested anonymity, and claims to have
relocated the inhabitants of 52 of them to houses it
built behind CMC at a cost of three million Birr
last year. Due to disputes with settlers the land
was given to the developer in the 2008/2009 fiscal
year.
Currently, there are seven houses still standing on the plot, but,
contrary to the city’s claim that Beritu has not
started development, the owner had started on
construction for the foundation of villa and
apartment houses. The houses that the remaining
residents are to be relocated are old and in need of
renovation, they say, refusing to move. However,
this reason has not yet been investigated by the
city administration.
The plots have been idle for years without any development taking
place, according to the manager of the Land
Administration and Construction Permit Authority.
Had it not been for the developers, the land would
have been used by the farmers who used to reside on
the land but had to be relocated for the purpose of
the real estate development.
“The developers exceeded the time they had to start construction,
according to the timeframe based on the kind of
construction they were constructing, with which they
had been provided,” Kassim said.
Construction of the ground floor plus three-storey, four-storey, and
seven-storey buildings should commence within six,
nine, and 18 months and be finalised in 24, 36, and
48 months, respectively, according to the 2009
directive of the authority.
Construction period extensions due to the force majeure (extreme
circumstances beyond control) include 12, 24, and 30
months for ground floor plus three storey, four
storey, and seven storey buildings, respectively.
The force majeure has to be serious enough to
convince the authority and to prohibit construction
to be reconsidered by the authority, Kassim said.
However, the administration’s imposition of its measures appears to be
inconsistent. There are plots of land that were
taken by developers who are yet to start
construction and are past the due dates set by the
city administration, but against whom no measures
have been taken.
Repossiossion will continue on to other plots on which development have
not started, according to Kassim.
In eight of the 10 districts, excluding Addis Ketema and Lideta, 826
developers with a total of 595,552sqm of plots are
reported not to have started development in the
given timeframe, according to the city
administration’s taskforce’s report.
Those who are displeased with the measures that the land administration
authority and the district offices took and feel
that they were unfairly included on the list of
developers whose land is to be reclaimed, have
written letters contesting the decision to the land
administration authority.
The situation has been investigated by the authority since it received
the letters. If any developer has unfairly lost his
land, the authority would reconsider its decision
and return the plots it has taken from her,
according to Kassim.
However, construction going on is not enough, as the city
administration will investigate if the construction
started before or after the deadline had passed,
Kassim said.
If the construction was carried out after the deadline’s lapse, the
authority can repossess both the plot and the
construction which has been carried out on the plot,
based on the lease contract, according to Kassim.
The deadline in which developers are expected to finish their
construction from the date of lease signing is a big
challenge, according to an industry expert, who
requested anonymity.
The delays resulted from problems that most developers experienced with
infrastructure and increased prices of construction
equipment, as well as financial constraints caused
by banks not lending money to residential real
estate developers as readily as to commercial ones,
according to the expert.
A lack of advanced planning and cooperation between the Addis Abeba
City Land Administration and Construction Permit and
district offices aggravated the problems. However,
by not delivering the plots on time, there are
financial problems on the side of the developers
too, according to the expert.
Most of the developers against whom the districts are taking action,
are not experienced enough to engage in the tough
real estate industry, which seems to be the cause
for the failure of some. Similarly, failure by both
the authority and district offices to confirm the
ability of developers before awarding the plots and
to inspect the construction process on time, also
contributes to the delays, said the expert.
To meet the city’s current demand, 750,000 houses must be built
annually, according to the expert. The current rate
of construction is only 20pc of it.
The authority will reconsider its decision and grant them their lease
rights, most of the developers believe. After
investigating the claims, holding up development on
the plots for another unspecified period of time,
the city will decide on the matter. It wants to
ensure that no land which is given for development
will remain idle in the 2010/11 fiscal year. |
