Land grading and property valuation criteria across all 2500 cities in the country are set to be formalized as a 51-page standard manual by the Ministry of Urban & Infrastructure to assess real property value targets, increased public revenue and harmonized measurements for the looming property tax.

The Real Property, Market & Valuation Permit Division within the Minstry seeks to create complementary standards to a historically haphazard approach to land grading in which city administrations autonomously evaluate a property and set land grades.

Real property is defined in the proposed manual to include land-holding titles and any land-related estate for housing, business or industry purposes that can be rented and sold in the market.

Land Development and administration bureaus across city administrations will be mandated to provide grading by factoring access to infrastructure, type of material used for construction and plot size.

Adane Egzie, who heads the valuation division at the Ministry, suggests that the primary goal of the new manual goes beyond merely adjusting land lease rates to boost government revenue as it aims to set standards for the levying of property taxes.

"It will serve as a cornerstone of the property tax," Adane told Fortune.

The draft explains that five grades based on scores out of 100 would be given, with the 1st-grade properties being those who manage to have aggregate values above 85 and the lowest grade of five being those who measure up to less than 40.

"The land grading criteria will improve the revenue mobilization of cities," he told Fortune.

Land lease auctions, which were restarted in Addis Abeba after a five-year break, fetched jaw-dropping bids back this year with one offer for a grade one 390sqm plot in the Sar Bet area of Kirkos District, having received a bid of 695,000 Br for a square meter.

Adane indicated population density information, infrastructural development and urban masterplans will also be factored into the valuation of land.

"A holistic approach was applied in drafting the standards," he underscored.

Adane also noted that the grading system complements another bill allowing the private sector to participate in property valuations by setting an overarching national standard.

The bill, under review at the Ministry of Justice, prescribes that city administrations and regional states would issue permits to the private valuators after training and tests.

He emphasized that the Addis Abeba and Dire Dawa city administrations will adopt the grading standard with little contextualization once it is approved.

The capital's city administration has been applying a land grading system with 4 main grades with 18 subcategories following a study by Addis Abeba University for a year at a cost of three million Br, which prompted the revision of lease auction offers.

Dereje Lakew, Head of Legal Affairs at the capitals Land Administration Bureau, points to the need to modify the proposed national standards to the peculiar context of each city.