Commercial Real Estate - Ethiopia

The Commercial Real Estate market market in Ethiopia is estimated to reach a value of US$168.10bn by 2024.
It is expected to witness a steady annual growth rate (CAGR 2024-2029) of 3.80%, leading to a market volume of US$202.60bn by 2029.
When compared on a global scale, the United States is projected to generate the highest value in the Real Estate sector, with US$25.3tn in 2024.
Ethiopia's commercial real estate market is experiencing a surge in demand due to the country's rapid economic growth and increasing foreign investment.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Ethiopia is experiencing significant growth and development.

Customer preferences: In recent years, there has been a growing demand for commercial real estate in Ethiopia. This can be attributed to several factors such as the country's rapid economic growth, increasing urbanization, and the expansion of various industries. As businesses continue to flourish, there is a greater need for office spaces, retail outlets, and industrial facilities. Additionally, foreign investors are also showing interest in Ethiopia's commercial real estate market, further driving the demand.

Trends in the market: One of the key trends in the commercial real estate market in Ethiopia is the rise of mixed-use developments. These developments combine residential, commercial, and recreational spaces in a single project, catering to the needs of both residents and businesses. This trend is driven by the desire for convenience and efficiency, as people prefer to live, work, and play in close proximity. Mixed-use developments also contribute to the creation of vibrant and sustainable communities. Another trend in the market is the increasing focus on sustainable and green buildings. As global awareness of environmental issues grows, there is a greater emphasis on constructing buildings that are energy-efficient, environmentally friendly, and socially responsible. This trend is particularly relevant in Ethiopia, where the government has set ambitious targets for reducing carbon emissions and promoting sustainable development. Developers are incorporating green building practices and technologies to meet these requirements and attract environmentally conscious tenants.

Local special circumstances: Ethiopia's commercial real estate market is influenced by several unique factors. The country has a large and growing population, with a significant portion of the population being young and urban. This demographic shift is driving the demand for commercial spaces, as young professionals and entrepreneurs seek opportunities in urban areas. Additionally, Ethiopia's strategic location in East Africa makes it an attractive destination for regional headquarters and logistics hubs, further boosting the demand for commercial real estate.

Underlying macroeconomic factors: The growth and development of the commercial real estate market in Ethiopia can be attributed to several underlying macroeconomic factors. The country has experienced sustained economic growth over the past decade, with a focus on infrastructure development and industrialization. This has attracted both domestic and foreign investment, leading to increased demand for commercial real estate. Furthermore, the government has implemented policies to improve the business environment and attract foreign direct investment, which has positively impacted the commercial real estate sector. In conclusion, the commercial real estate market in Ethiopia is experiencing significant growth and development due to factors such as rapid economic growth, urbanization, and the expansion of various industries. Customer preferences are shifting towards mixed-use developments and sustainable buildings, while local special circumstances such as a growing population and strategic location further contribute to the market's growth. Underlying macroeconomic factors, including sustained economic growth and government policies, also play a crucial role in driving the development of the commercial real estate market in Ethiopia.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.