The Addis Abeba City Administration has completed the first phase of a study to determine appropriate standard benchmarks on land lease prices and the valuation of property in the city.
Upon the request of the Land Administration and Building Permit Authority of the city administration, the development of a new land grading system was undertaken by the Ethiopian Institute of Architecture, Building Construction and City Development (EiABC) at Addis Abeba University (AAU) through its policy chair.
The first draft findings report of the study, which seeks to identify technical and institutional gaps in the existing land grading system, were presented to stakeholders by the EiABC at Ghion Hotel on Wednesday, April 27, 2011.
These stakeholders included bankers, lawyers, engineers, and city officials.
“The input of different stakeholders is crucial to upgrade the study,” Kasim Fite, manager of the land and building permit authority at the municipality, told Fortune. “The report found the existing pattern beyond any theoretical rationalisation.”
The study was commissioned, following the findings of another study conducted by the Addis Abeba Chamber of Commerce and Sectoral Associations (AACCSA), in 2009.
There was no obvious correlation between the lease prices of land in Addis Abeba and existing land grades, the research found.
The system in use divides the city into three zones or grades according to concentric circles starting from the city centre. Plot prices decrease as its distance from the centre increases.
The 1,035 plots surveyed in the study by the AACCSA indicated no pattern in the lease prices of land that is divided into central, transitional, and expansion grades and up to five classes.
While land pegged at grade one class one should fetch the highest price in the city, the survey found grade three class three plots being leased for 3,150 Br per square meter, a higher price than the 2,050 Br per square meter of some grade two class two plots.
In applying the theory, land in Arada should fetch the highest price followed at a long distance by Kirkos, but plots in Kolfe Keranyo fetch much lower prices while land in Bole is higher priced.
“The current land grading system, prepared in 2003, is no longer relevant,” Kasim said. “It is not effective in guiding and facilitating land grading.”
In searching for an alternative to determine reliable trend based price data on land for citywide land valuation, EiABC considered five broad land categories: infrastructure, physical properties of land, developmental factors, social factors, and municipal services to attain a level of homogeneity, according to Sisay Zenebu, an instructor at EiABC and a member of the research team, said in his presentation of the findings.
The team developed a new map by synchronizing maps prepared on the basis of these categories.
“The new grading system opens land up to even 100 grades based on the categories instead of only the 14 grade levels currently in use,” Sisay told Fortune. “The new grading system affords the opportunity to standardize benchmark prices on the lease and valuation of property.”
The input from the stakeholders will be considered and integrated to formulate a final report that will be used to develop benchmark prices for property in the second phase of the project that is to kick off in three weeks.
“In addition, the study could help to improve institutional management, periodical land market assessments, and integrate monitoring,” said Abebe Kebede, another member of the research team who was also involved with the previous study.