Rent Tremor

Dec 29 , 2018.

In a move reminiscent of overnight capitalist reforms in the post-Soviet 90s, the Federal Housing Corporation sent letters to thousands of tenants of its commercial units in mid-December that sent shock waves through Addis Abeba’s business community. The Corporation, after conducting a market survey, slapped an average increase of 2,090pc on its state-owned units, effective January 2019.

Devastated by the news, some tenants organised a committee and protested, demonstrating in front of the head quarter of the Corporation on Monday, December 24, 2018, on Ras Mekonnen Avenue, near La Gare area. Their demands were not specifically against the increase in rental fees but that there were no proper consultations. They also took issue with the evaluation methods, pointing out that the surveys were poorly conducted and did not take into account important variables such as the conditions of the properties and floor levels. The protesting tenants were not impressed either by how the Corporation used current market prices - which it denies - to determine rates for state-owned properties they say have no parking spaces, alternate sources of electricity and, in some cases, elevators.

The largest rent increases were in the National Stadium area, where a whopping average rent hike of 6,784pc was imposed on tenements. Not having altered rental rates in 43 years, tenants of commercial units that were rented for a monthly fee of 674 Br received letters informing them to start paying 46,400 Br beginning in January of the New Year. It was a corrective measure the Corporation believes should be enforced after its survey found that 65pc of all the tenants in its commercial units were paying between 65 Br and 95 Br a square metre.

Although many tenants at private properties as well as experts believe the matter could have been handled more smoothly, there is a belief that the adjustment of the rental rates in a city where the demand for land is outstripping supply is overdue.

The tenants feel wronged, and failing to resolve the issue on the day of the protest, they are looking forward to Thursday, January 3, 2018, when the Corporation’s Director, Reshad Kemal, has pledged to hold talks over the matter. YOU CAN READ THE FULL AGENDA PIECE HERE.

PUBLISHED ON Dec 29,2018 [ VOL 19 , NO 974]