Addis Abeba Officials Backtrack After Uproar Jolts Property Owners

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A controversial decision to clear a large tract of land in Addis Abeba's Wereda 1, around Flamingo and the Olympia roundabout, potentially affecting 31 properties, has been abruptly reversed, bringing relief to the property owners but leaving developers uncertain in its wake.

Kirkos District officials initially notified property owners in the upmarket neighbourhood that their land was needed for an expansion of the Oromia Regional State Presidential Office. The Regional State's Communications Bureau announced in 2023 that the office project would cover six hectares and had been contracted to China Civil Engineering Corporation (CCEC) for completion within two years.

The unexpected news had thrown businesses into confusion, triggering anxiety among proprietors who own prominent establishments, including Hijira Bank headquarters, Lions Hotel, ABC Trading, Bemore Apartments, MSN Real Estate, and BH Apartments.

After a series of meetings last week with Wereda 1, Kirkos District, and city officials, including an audience with Mayor Adanech Abiebie on Thursday, April 24, 2025, property owners claimed to have received assurances that no demolition would take place. They also claimed that the Mayor confirmed that the cabinet had not approved the expansion, stating that the area, already developed, should remain undisturbed. District authorities also met with proprietors to "apologise for the mishandling of communications."

The initial communication about the redevelopment plan was chaotic. Property owners were hurriedly called to discuss compensation before even receiving formal demolition notices.

Nuredin Hassen, a partner and board director at MSN Real Estate, thought the initial meeting with the District officials was about routine discussions for raising funds for development, similar to those held for the riverside project. However, the conversation quickly shifted to detailed compensation talks, including offers to cover rents.

The initial meeting between city officials and property owners revealed an early compensation plan for losses, covering two years of rental income, as well as replacement plots for relocation. A letter dated January 26, 2025, from Mesafint Assefa, director of the Land Bank & Transfer Directorate, instructed district officials to negotiate these terms.

In response, concerned property owners drafted an urgent appeal to the city administration outlining their grievances. Although city officials initially refused to accept the letter formally, it eventually secured them an audience with Mayor Adanech, according to the property owners.

In the letter, they argued that the buildings were legally developed, either through the city administration's cabinet decisions or valid construction permits. They also stated the area’s commercial value, noting its role as a hub for public bureaus, international companies, and hospitality services. The owners argued that demolishing such properties would not only ruin their businesses but also severely damage the trust of diaspora investors who returned to Ethiopia following government invitations.

Widespread panic among property owners prompted a second meeting with Addisu Shanko, head of Kirkos District, shortly after the Easter holiday. Addisu expressed surprise at the project's scale, claiming he had not been informed, and swiftly assured the property owners that the demolition plan had been suspended indefinitely. He openly admitted the initial communication was mismanaged, calling the summoning procedure "unprofessional," and promised disciplinary measures against the "responsible officials."

The damage to business confidence has already been done. Some tenants began searching for alternative locations, while banks demanded additional collateral from property owners, reflecting heightened perceptions of risk. Sales at several ongoing apartment projects halted abruptly, heightening financial pressures on developers.

Nuredin disclosed that sales on three of their 15-storey apartment buildings ceased immediately following the initial announcement. Although over 90pc of these apartments were already sold, buyers quickly began demanding refunds. Banks also required new collateral arrangements, creating a severe financial squeeze for ongoing projects.

"I had projects that depended on this one," said Nuredin, worrying about the cascading adverse effects of the announcement.

Concerns such as this persisted among business owners about the potential lingering impact of the debacle. A hotel proprietor, who had begun preparations to remove furnishings worth more than 100 million Br, voiced fears over irreversible financial losses if the city reversed its position again.

"We need assurance," he said.

Addisu sought to allay fears like this, urging property owners to treat the matter as "just a rumour in the wind" and emphasising that future development plans would involve comprehensive dialogue with stakeholders first. Property owners say they are grateful for the timely intervention by Mayor Adanech and her administration's officials.

"We’re relieved," said Yonatan Beyene, representing the developers of Bemore Apartments located off Africa Avenue (Bole Road).

However, despite the immediate relief, broader investor uncertainty persisted. Business consultant Terefe Jima warned that abrupt policy reversals like these severely damage investor confidence, potentially leading to job losses and undermining the local business environment.

"Investor uncertainty leads to investment reduction and, in the long term, political instability," Terefe said.

He cautioned that sudden policy changes negatively impact banks' willingness to lend, disrupt supply chains in construction, and lead to economic losses.

"Announcements like this will put local businesses out of the ring," Terefe told Fortune.

PUBLISHED ON [ VOL , NO ]

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