Commentaries | Jan 31,2021
The Federal Housing Corporation (FHC) has received a record-high offer for a commercial space up for rent last month, in the Merkato area.
The 4,828 Br offer for a square meter made by prospective tenants is almost 1,000 Br higher than the highest offer made so far and 230 Br more than the offer given by the forerunner for the same store. The offer was made by a businessperson, Mulubirhan Mesfin, who submitted a bid of 301,000 Br to rent a 62sqm store situated around the Anwar Mosque area in Mercato.
The Corporation put up 105 stores for rent in May this year in five lots. Sprawled on 8,918qm of land, the stores are located in seven districts and were built during the five-year Italian occupation period. Later nationalised by the military government, they have remained under the ownership of the state. The Corporation manages 18,153 units in Addis Abeba and Dire Dawa, of which 37pc are rented to businesses.
The interest for these outlets in Merkato was high, considering the 1,302 bidders which placed offers for 65 stores. With an average of 1,745 Br a square metre, these offers are over 10 times higher than the lowest submitted by a bidder for a store in Sefere Selam, Addis Ketema District.
This interest was not matched for outlets located around the Tor Hailoch and Aba Koran areas. Almost no bidders were seen for the 40 stores up for rent. The stores were reclaimed from businesses that had transferred their rights to a third party and those unable to pay rent arrears, according to Kibrom Gebremedhin, communications director of the Corporation, a state enterprise with a 1.8 billion Br in annual revenues.
Amanuel Mengistu is among the businesspersons interested in renting a store located near Cinema Empire in Piassa. He found the offers from other bidders exaggerated.
"My family pays 550 Br a square metre for a store located at Amde Gebeya," he said of a place in Merkato. "The highest offer given during the latest bid is very unrealistic. Paying as high as a quarter of a million monthly rent for a 62sqm at a time when there is a business slowdown and unpredictable economic environment is not rational."
Wubishet Abera, a consultant in property management, agrees.
"Even in prime locations found in Bole, a store is rented for as high as 1,500 Br a square-metre," Wubishet told Fortune. "Such an offer may also encourage private property owners to adjust their rents, thereby fuel the inflationary pressure."
PUBLISHED ON
Jun 26,2021 [ VOL
22 , NO
1104]
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