Retail Dreams Dim in Addis Abeba as City Auctions Fall Flat

Retail Dreams Dim in Addis Abeba as City Auctions Fall Flat

Nov 8 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Addis Abeba’s latest public auction for retail space ended with an unexpected twist. Out of 373 commercial units up for bid across the city, only 92 attracted offers, leaving more than 75pc of shops and offices without a single bidder. The city’s ambitious corridor development plan, designed to boost commerce, now faces new questions as units sit empty and prices plummet.

The Addis Abeba City Administration’s recent attempt to lease hundreds of commercial units in public housing projects has floundered, revealing a deepening malaise in the capital’s retail property market.

A staggering three-quarters of nearly 400 units up for lease went without a single bid, a startling reversal from a previous round a few months ago, when similar offerings attracted an avalanche of interest. The outcome has raised questions about the city’s pricing strategy, the appeal of its development projects, and the broader economic realities facing businesses in the capital.

Earlier this month, the City’s Housing Development & Administration Bureau concluded its second round of bidding for 373 commercial units scattered across eight of the 11 districts. While 439 hopefuls purchased bid documents, only 92 units found bidders. More than 75pc of the shops and offices offered, comprising some 281 spaces, were left without a single offer. The scale of the gap is even apparent during the first round, when 319 units were made available and drew a robust crowd of 1,530 bidders.

Not only did the number of bidders drop dramatically in this second round, but the offers themselves were markedly lower per square meter.

The commercial units are public-owned condominium properties, part of the city’s corridor development projects, and were distributed across Kolfe Qeranyo, Arada, Lideta, Yeka, Gulele, Kirkos, Bole, and Akaki Qality districts. Kolfe Qeranyo saw the largest batch with 84 units up for bid, followed by Arada with 75 and Lideta with 54. To bidders and would-be tenants, it was required to present a residential ID, purchase the bid documents, and deposit either 50,000 Br for shops located near corridor roads or 30,000 Br for other areas, in the form of a certified payment order.

The underwhelming outcome has left officials and market participants searching for answers. According to Feysel Selman, head of the government housing management team at the Bureau, the city officials have yet to identify the reasons for the slump in interest.

“The reason for the decline in the number of participants is still unclear,” Feysel told Fortune.

The previous bidding rounds had been buoyed by intense competition, especially for high-profile locations. Back then, the highest price hit 18,500 Br a square meter for a shop in the prime Amist Kilo area of Arada District, a stone’s throw from St. Mary’s Coptic Orthodox Church.

This time, interest once again concentrated on Arada, particularly around the Arat Kilo area, on King George Street, known locally as the former “Joly Bar” area, a retail strip with a storied past. The site, once home to supermarkets like Abadir, underwent a transformation as part of the city’s corridor project. Old buildings made way for “Arat Kilo Plaza,” which now houses new shops. The Bureau offered 12 units for rent in the latest round, starting at a baseline of 2,000 Br for a square meter. Bidding was fierce, and it was here that the highest offers of the round emerged.

Tenaghe Gebre topped the list of bidders with a winning offer of 11,600 Br a square meter for a compact three-square-meter unit. Wendesen Eshetu followed with 10,335 Br a square meter, also for a three-square-meter space. The third-highest bid was placed by Tewodros Tilahun, who committed 8,050 Br for a larger, 10Sqm unit. These eye-catching numbers, however, mask deeper worries about the health and logic of the market.

Tesfaye Tadesse, a veteran intermediary in the area, called the current bid prices “expensive compared to the local market rate,” noting that prevailing rents for similar commercial spaces reach around 2,000 Br a square meter.

“The Bureau’s current price is almost five times higher than the market price in this area,” he said.

The city initially planned to use the site as a taxi terminal, but it is now a parking lot, a shift Tesfaye sees as a missed opportunity to create the bustling retail environment bidders hoped for.

“If the area had been a taxi terminal, it would have turned into a vibrant marketplace,” he said. “But now, it is difficult to make money here. People don't live in this area. There’s little foot traffic, and even the rent prices are too high.”

Other sites also saw actions, particularly those around Bel Air on Haile Sellassie Street, the Adwa Bridge on Côte d’Ivoire Street, and Tewodros Square on Mahatma Gandhi Street. Still, for many bidders, optimism was mixed with caution.

Gashaw Alemayehu, who secured a three-square-meter shop in the Joly Bar area for 7,205 Br a square meter, described the bidding as “tough,” with most interest focused on Arat Kilo.

“People were offering very high prices to win the bid compared to other parts of the city,” he said.

Gashaw recounted how, after results were posted, crowds flocked to the site, eager to rent or buy the new shops. However, he insisted the premium was justified.

“Considering the area, I don’t think the bid I paid is expensive," he told Fortune. "I believe once I set up my business, I'll be profitable and can pay the rent without any difficulty.”

Others, like Biniyam Gelaye, who won a 65Sqm space near Tewodros Square with a bid of 2,561 Br, remain less certain. Biniyam had mixed feelings.

“Even though I offered a high amount and managed to win, when I think about it now, it feels expensive,” he admitted. “It'll be challenging to run a new business in that area while paying this much per square meter.”

In the district around the African Union headquarters on Ras Lulseged St., the Bureau auctioned 14 commercial units, all of which were snapped up. These shops were uniquely rented in U.S. Dollars, a policy the Bureau says is a holdover from previous joint bidding rounds involving the Finance Bureau and the City Building Permit & Control Authority.

“To keep the consistency of the existing transaction, the Bureau continued renting these units in dollars,” said Feysel.

The highest successful bid in this area reached 42 dollars a square meter.

The largest commercial space on offer in this round, a 128Sqm unit near Tewodros Square, went for 6,630 Br. Other companies took part as well. Leo African Trading Plc rented a shop near Tewodros Square for 2,595 Br, while Amaga Plc secured a space in the Shola Market area for 3,050 Br per square meter. Feysel described the process as open and transparent.

“So far, the Bureau has not received any grievances or complaints about the bidding process,” he said.

He disclosed that the unrented units will be put up for auction again in the coming weeks.

Real estate insiders attribute the market’s unpredictability to a confluence of factors. They see rents in Arat Kilo artificially inflated compared to other busy areas such as the Megenagna and Sarbet areas.

“During the bidding process, brokers, not the actual business owners, often submit inflated bids and later transfer the properties at higher prices,” said Hiskeal Yilma, co-founder and deputy general manager of Agafari Property Marketing Plc.

Group bidding, where participants coordinate to drive up prices for a favoured winner, is another problem.

“These practices are driving up the bidding prices beyond market levels,” Hiskeal said.

The supply of quality retail space, already tight following the demolition of shops in areas such as Arat Kilo, Piassa, and Cazanchis, is another factor. These neighbourhoods, home to major government offices, private companies, and universities, attract high traffic. That demand, in turn, has helped push rents higher. But challenges remain. With limited parking and the removal of taxi terminals as part of corridor development, businesses face shrinking foot traffic and rising operating costs.

“To cover these costs, traders may charge higher prices, which risks losing middle- and low-income customers,” Hiskeal cautioned. “I don’t believe most of these businesses will generate sustainable profits given the competition and high operating expenses.”

He urged city officials to address intermediaries, investigate inflated bids, and move toward a bidding system more closely tied to market realities and location. Transparency, he added, should remain a top priority in future rounds.

PUBLISHED ON Nov 08,2025 [ VOL 26 , NO 1332]