Officials at the Addis Abeba City Administration have rolled back a house valuation increase set in place less than a year ago, hoping to stimulate activities in a sluggish real estate market. The initial upsurge in valuations led to a substantial downturn in customer traffic, as many residents found themselves discouraged by the ensuing hefty fees associated with land transfer services.

The decision articulated through a directive signed by Sisay Getachew, head of the Land Management & Administration Bureau, and Gifawossen Desisa, CEO of the Land Holdings & Registration Agency, marks a pullback in the city's land management and taxation approach.

"We want to alleviate the financial burden on citizens," said a senior city official.

The revised directive issued last week instructs District officials to adopt updated rates that will reduce fees and stamp taxes by as much as 34pc. The adjustment comes in the wake of a comprehensive study conducted three months ago, which attributed a halving in the number of customers seeking service to the increased rates established under the tenure of the Bureau's former head, Kenea Yadeta (PhD), in June last year. Kenea has been appointed since to serve as a national security advisor to Prime Minister Abiy Ahmed (PhD).

Elias Ibrahim, the Agency's senior expert and one of the study's contributors, noted that while the initial revisions did increase revenues by 400 million Br from the same period last year, they also resulted in a substantial rise in customer complaints and a dramatic decline in service uptake. The number of customers visiting the Agency administering 340,000 landholding files plummeted by as much as half, while those going to the Bureau dropped by 36pc after the rates imposed in June.

"It needed to be revised," Elias told Fortune.

According to Elias, the previous rates did not consider the double-digit inflation rates reported by the Ethiopia Statistical Services (ESS), reflecting bloated valuations, with condominium units located on the outskirts valued at 47,769 Br a square metre now dropping to 25,080 Br.

"It's still tough to say whether the new rates reflect market conditions," Elias said.

The land valuation system is crucial for determining property taxes, collateral values, and the transactional value of real estate properties. However, the limitations in obtaining accurate valuations in emerging economies are well-documented. The International Monetary Fund (IMF) discovered the scarcity of published information and the difficulties in accessing transactional data essential for proper valuations.

Ethiopian experts echo these concerns, pointing to the frequent complaints arising from what they describe as poorly structured and unprofessional valuations.

Melkam Ayalew, head of the property evaluation department at Debre Markos University, criticises the existing valuation process, observing that data from the Ethiopian Statistical Services does not accurately reflect the country's economic situation.

"I doubt if data from ESS reflects the country's reality," he told Fortune.