🏠 House Hunting in Addis

Welcome to the latest edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• 🔏 A Beginner’s Guide to Moving Out Your Parent’s Home or Kicking Out Your Housemate

• 👣 Microfinance: Small Steps, Big Dreams?

• 🗝️ The Key Takeaways

Thanks for reading!

To Rent or to Buy? That is the Question.

Finance

Alright, picture this: you’re in your childhood bedroom, scrolling through listings on your phone, trying to figure out if you’re ready to make the leap from your parents’ house to something with fewer rules and more freedom. Whether you're dreaming of a sleek villa in Lebu or an apartment in Bole, the thought of independence is real—until you start adding up the numbers.

Here's what the housing game really looks like in አዲስ አበባ 🌻.

The Reality of Renting in Addis

Let’s start with renting, shall we? You’re looking for a one-bedroom apartment in central Addis, so let’s talk Bole, Sar Bet, or even Gerji (Upper Bole). Expect to pay ETB 40,000–80,000  per month, depending on the location and the size. Want to save a bit? You can look at areas like Bethel or Summit, where rents dip to ETB 15,000–30,000 for a similar space (thank you, Addis traffic, for making these less central spots feel more appealing).

But there’s a catch, of course: in Ethiopia, landlords generally want 3 to 6 months’ rent upfront, meaning you’re handing over ETB 120,000 to 480,000  before you even get the keys. No big deal, right? Well, if you’ve been actively saving since you got that graduation money, it’s manageable, but for most Ethiopians... yikes.

Buying: The Dream (and the Reality)

Now, let’s talk about the holy grail: owning your own home. A G+1 home in areas like Lebu will run you around 20–30 million birr, while a small but modern 3-bedroom apartment in Ayat might cost you about 5–10 million birr. That’s right—millions. Dream big, right? The government’s “affordable housing” like the 40/60 program is nice in theory but getting a spot? Good luck.

The financial hurdles don’t stop there. Ethiopia’s credit crunch is the next hurdle. Banks are tight with any loan, let alone mortgage loans. Assuming you manage to get a mortgage, you’ll have to cover a large portion of the cost upfront (typically a down payment of 30% of the total price), and repayment periods are generally limited to 15–25 years. So let’s break this down with an example:

For a 3-million birr condo:

• Down payment: 1 million birr upfront

• Monthly payment: Around 20,000 birr for the next 15 years.

Sounds doable? Maybe. But let’s not forget that Ethiopia’s banking system isn’t exactly known for its flexibility—if you’re not sitting on a pile of cash or a well-established business, getting a loan can feel like getting a visa to Mars.

But What About Collateral?

Banks in Ethiopia generally want collateral when lending money. So, unless you’re one of the lucky few who has assets (like land, a car, or even a business) that can be used as collateral, don’t expect to walk into a bank and get approved easily. The bank will likely want a title deed for the property you’re purchasing as collateral. But if you don’t have one? You might have to bring in something else of value, like a family home or a car—something tangible that they can hold as security for the loan.

Locals vs. Diaspora: A Tale of Two Buyers

But hold on, it’s not all the same for locals and the diaspora. If you’re a local living and working in Ethiopia, the bank will likely want to see your salary history, which can be challenging to prove if you’re new to the workforce or working in the informal sector. And as we’ve mentioned, the credit cap is a real issue for most people.

On the flip side, Diaspora Ethiopians looking to buy property in Ethiopia face a different reality. These foreign currency carrying individuals enjoy slightly more favorable terms. Banks tend to offer better loan-to-value ratios (meaning they’ll lend more of the property’s value) and longer loan repayment terms—depending on your forex contribution.

While the bank may be more lenient with the loan-to-value ratio for the diaspora, it still doesn't come without its hurdles: higher interest rates to the global average, more stringent documentation requirements, and the possibility of currency fluctuation affecting your loan repayment amounts (sometimes to your advantage).

Final Thought

Whether you’re renting or buying, the Ethiopian housing market is no easy game. But one thing’s for sure: staying at home might save you money, but eventually, even mom will want her living room back. So start crunching the numbers—and maybe cut back on eating out. Your future self will thank you.

Sources for prices:

• LivingEthio

• Betoch.com

• Jiji.com.et

• RealEthio.com

Key Takeaways

1. Stay Strategic: If you’re renting, consider neighborhoods like Gerji (Upper Bole) or Megenagna. They’re more affordable and still relatively central.

2. Buy Smart: If you’re leaning toward ownership, condos in places like Jemo or Summit offer a balance of price and location. Just be ready for that down payment hustle.

3. Think Long-Term: Real estate in Addis is still one of the safest investments. If you can’t buy now, start saving aggressively and build for when the opportunity strikes.

ፍራንክ Picks 

🚶🏽 Event: Ethiopia Telecom Market Assessment

🗞️ In the news: TikTok Ban—Ethiopian Creators’ & Diaspora’s Loss

♟️ Innovation: Kircha may bring Real Estate investing to the mass

A ‘Micro’ Look At Microfinance :)

Finance

→ Financing Aklilu’s Dream

→ Financing Alemayehu’s Dream

→ Financing Workinesh’s Dream

These are the changing sentences hovering on Metemamen Microfinance’s website.

Clearly showcasing their sentiment that they work for the people: the seamster, the honey seller, the tiny coffee shop owner and more people who seem to make their living through small endeavors.

As you can imagine, these people are never seen queuing up in front a loan officer at your local bank like the morning rush at ሸዋ ዳቦ.