"In fact, as business is becoming more and more challenging due to the numerous bureaucratic bottlenecks, multiple tax obligations, and other challenges stemming from engaging in a formal way, many have found this business hassle-free and lucrative. Demand is high; return is extremely high; tax and other regulatory requirements are also manageable. As a result, many business people in the city have joined this sector parallel to the main business lines they routinely engage in. In fact, there are cases where businesses are downsized as owners withdraw a portion of their capital from their formal businesses to engage in these informal and lucrative real estate business and house and land transactions. The situation is creating a growing interest among land owners as the price of an almost-bare piece of land has significantly skyrocketed because of this developing business trend in the city.
“Currently, the number of people who want to sell their land is rising. These people have either leased the land from government to develop by themselves or have gotten it through inheritance or other means. But, they fail to access the finance to build a house on it,” says an engineer who regularly buys land plots using such arrangements to build villas for sale. “We finalize the construction of the houses within three to five months using adhesives and other chemicals that helps shorten the curing time of concrete. As soon as the house is finalized, the price of the houses appreciates. One can then sell it for double the cost of construction and land.” This means if one has ETB20 million to start with, it’s possible do the business at least three times in a year, allowing the owner to make about ETB80 to 100 million in net profit without having the need to pay tax or hire permanent employees. No wonder so many business persons are attracted to this informal sector which is currently devoid of proper governmental regulation. At the moment, no business is profitable to the scale which real estate business, especially the informal type done without business licenses".
Engineers, on other hand, say most of the villas built by individual developers are of poor quality. “The houses are beautiful and attractive from the outset and outside. However, the strength and quality of the houses are very poor, including their structure as the developers use adhesives and chemicals to shorten curing time of concrete. Their focus is on finishing the project in a couple of months and moving on to another similar project,” an engineer with decades of experience explains. “They are usually built by people who have the money rather than formal engineers and supervisors.”
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