Courting Foreign Buyers of Properties While Land Remains State-Owned

May 31 , 2025.

It is seldom flattering to be bracketed with North Korea and Myanmar. Ironically, Ethiopia has long shared their company on one narrow but emotive list. They are countries that forbid foreign nationals from owning bricks and mortar. That could soon change.

On May 1, 2025, the Council of Ministers approved a bill that would let non-citizens buy buildings - houses, flats or shops - so long as they pay at least 150,000 dollars for each deed, bring the money from abroad, accept a limit of five properties and leave the underlying land in the hands of the state, as the Constitution demands.

Parliament now sits on the brink of its biggest ideological tweak since imperial times.

The proposed opening would nudge Ethiopia out of an exclusive club. Among nearly 200 sovereign states only a handful, China, Indonesia, Nigeria, the Philippines, Thailand, Myanmar and North Korea, enforce outright bans on foreign ownership of real estate. Far more put up variable restrictions.

Like Ethiopia, the Chinese state owns all land itself and grants time-limited use rights even to domestic firms. Mexico bars direct title within 100Km of its borders and 50Km of shore, forcing outsiders into fiendishly complex trust structures. Australia subjects every purchase by non-citizens to the treasurer’s nod; the term “national interest” stretches so wide that deals under 10 million dollars are often spurned.

Canada imposed a two-year freeze on non-resident homebuyers in 2023. Brazil caps any single foreigner at 50 “modules” of rural land and limits outsiders to a quarter of a municipality’s territory. Even supposedly liberal Europe bristles with hidden fences. Switzerland demands prior permits, Turkey forbids holdings above 10pc of a district, and India bars citizens of several neighbours from buying at all.

The ruling party’s Chief Whip, Tesfaye Beljigie (PhD), defended the bill before Parliament, insisting that the gains are clearer. Foreign investors, he argued, would pour hard currency into an economy battered by war, drought, and inflation. His government counts on construction to pull people into jobs and hopes that the offer of actual ownership, rather than the long leases dispensed to factory developers, will tempt capital in.

Housing Minister Chaltu Sani claimed that the reform could lift GDP by a full percentage point within three years. According to official data, Ethiopia attracted 3.82 billion dollars of foreign direct investment (FDI) in the 2023/24 fiscal year, 11.5pc up on the year before but still shy of targets. Real-estate consultants reckon the sector could grow by nearly 10pc a year through 2028 if outsiders pile in.

Developers certainly smell money. Addis Abeba’s skyline bristles with half-finished towers whose skeletons have been halted by shortages of foreign exchange to import construction materials. Proponents of the bill hope that dollar-denominated buyers would unclog those supply chains. Cement makers would have orders again.

But the housing ladder is already missing several rungs. The average listing price for an Addis flat sits at 9.4 million Br. The World Bank estimates that Ethiopia needs 486,000 new homes annually between 2025 and 2035, which is three times the current supply. Median monthly wages hover near 3,000 Br, according to the International Labour Organisation (ILO). Only 23pc of housing finance comes from banks; the rest is scraped together from relatives and savings circles.

Against that backdrop, opponents fear the bill will shove prices even higher, deepening inequality and displacement.

Critics of the bill abound in Parliament. However, the outspoken members are from the opposition bloc, such as Tsehayu Alemu. Warning of “an already speculative bubble without foreign buyers,” he urged Parliament’s Urban Infrastructure Committee to slow-walk the draft law.

The bill before Parliament tries to let in money while letting out air. It caps ownership at five units, forbids local-currency loans, blocks access to subsidised schemes, and bars purchases near borders. Violators risk confiscation.

Yet, rules are only as sturdy as those who apply them. Ethiopia has few certified valuers. Title disputes already clog the courts. Many fear, understandably, that a wave of sophisticated foreign investors, armed with lawyers and deep pockets, could overwhelm registries, use loopholes, and tilt outcomes in their favour.

There is also the small matter of history. Land is not a commodity; it embodies identity, sovereignty, and memories of war. The 1995 Constitution vests ownership in the “state and the people” partly to prevent farmers from distress sell-offs. Surrendering even the structures above the soil to outsiders stirs unease. Reforms perceived as benefiting only foreign interests could spark resentment.

Federal legislators will find striking a balance harder because state institutions are weaker. Its financial system is shallow, and its capital market reforms are embryonic. A boom-and-bust cycle like the one experienced by advanced economies would be brutal. Empty towers already cast shadows over Addis. Foreign cash might finish them, or condemn them to stand forever as concrete tombs if sentiment turns.

In low-income countries, speculative building often crowds out funds for factories or farms, skewing development toward projects that are not economically viable.

However, none of this makes inaction wise. A blanket ban leaves land cheap but capital scarce. An open-bar policy risks the reverse. A calibrated middle, however messy, can work.

Tight caps on district-level foreign holdings, stiff taxes on vacant units, sunset clauses on resale, and demands that developers devote slices of projects to affordable housing. Each tool can steer money toward useful ends. Where agritech firms have rented African farmland, governments have linked licences to outgrower schemes that spread technology and jobs. A city-based version could tie permits to mid-range flats and social housing quotas.

The administration of Prime Minister Abiy Ahmed (PhD) has tiptoed down policy reform paths before. Telecom is being eased open, banks are preparing for foreign stakes, and the exchange-rate regime is edging towards flexibility. Each step followed the same rhythm, with promise, delay, tweak, and advance.

The real estate bill appears to be the latest bar in that tune. Parliament, mindful of backlash, will quibble over commas. Yet, its choice is plain. Keep the closed status quo and share dubious kudos with Pyongyang, or venture a regulated opening that might unlock both cranes and contracts.

Land, after all, is both patrimony and potential. Padlocked, it withers; opened carelessly, it can ignite. Opened wisely, it may yet nourish Ethiopia’s parched growth. Whether federal legislators can draft a key more precise than a club will decide which of those futures is built.

PUBLISHED ON May 31,2025 [ VOL 26 , NO 1309]