Overview

The large demand for residential housing in Addis Ababa is primarily fueled by a population in excess of 5 million and currently growing by about 400,000 people a year. In a about ten years, one in every four Ethiopian (or 10 million inhabitants) will be urban dweller. With an estimated 5.5 persons per household at the current population level, there would need to be 600,000 housing units in Addis Ababa alone. The estimated number of existing housing units is under 400,000. Additional housing demand to meet the yearly population growth in Adds Ababa is 80,000 units. The number of units being built annually for the past two to three years has averaged approximately 6,000 including government condominiums.

Private sector construction is grossly inadequate and contractors are currently building an estimated 2,500 to 3,000 units in total. This does not approach meeting even the current annual demand of approximately 80,000 units let alone cutting into the pent-up demand of over 600,000 housing units. Efforts to solve the housing deficit in Addis Ababa have always fallen short of demand.

In addition, most of the current private sector residential real-estate construction targets high end income-earners, as the units cost as much as Birr 2.5 million for a three bedroom flat. There is little construction of “affordable housing” in the range of Birr 500,000 to 900,000 aimed at underserved segments of the domestic client base. Reflecting this severe supply/demand imbalance housing prices escalated dramatically. Houses in Ayate settlement that used to sell for 400,000 Birr, five years ago are now priced at two million and above.

Business Strategy

• The business plan of Access Real Estate is to focus on ‘’affordable’’ residential housing and to operate with a unique profit maximizing business strategy which include:
• Targeted market segment - exclusively focus on building the highest possible quality of affordable housing for the middle market segment (Birr 300,000 to Birr 900,000 apartments) where there is massive pent-up demand.
• Strategic approach - adopt a customer-focused approach throughout its development: including pre-design, urban planning, functional design; quality construction and selling; and post-implementation or ensuring effective property management and maintenance.
• New Technology - introduce new building technologies that will cut costs and save construction time without compromising quality.
• Controlling the supply chain - to be self-contained or control sub-contractors to the extent possible. There will be minimal outsourcing. ARE will aim to control its supply chain, for instance by building its own quarry site for gravel and mixes, owning its own machinery, etc. This strategy increases profit by reducing the cost to ARE and minimizes potential delays, creating customer satisfaction while ensuring timely receipt of revenues.

Current Projects

Project 1

Joint venture project with Miraf Real Estate to develop the 6,000 square meters plot of land near Megenagna. The project is a seven storey, 154 three-bedroom apartment complete with parking, laundry, recreational and other facilities and priced at a competitive price of Birr 795,000, including VAT.

Construction at this site began on September 2009 and it is progressing on schedule for completion in 18 months or March 2011.

U shaped 154 unit apartment complex at Megenagna (currently sold out)

Project 2

In December 2009, Access Real Estate entered a second joint venture agreement with Laura Trade and Industry which owns 2,900 square meters of land adjacent to the Miraf property.

We are constructing a single tower of seven stories, 96 3-bedroom apartments, each with 2 baths, spacious living area and kitchen as well with storage space and balconies. Both apartment types are approximately 125 square meters in size (up to 135 square meters including the balconies)

The structure will be accessed by means of three different lobbies and six well placed elevators (two elevators in each lobby). In effect, three towers with only 4 units per floor with appropriate fire escape. All apartments will be cable ready and coin operated laundry facilities will be located on each floor. Two levels of parking, enough to accommodate 192 cars providing each apartment owner with two assigned underground parking spaces.

At the ground level, the plan includes spaces for a gymnasium, game rooms & meeting rooms to be determined by the owners association.

Intelligent Building Design

Intelligent Building is the “Use of technology and process to create a building that is safer and more productive for its occupants and more operationally efficient for its owners.”

The results from implementing these technologies and processes are buildings that are convenient, comfortable, efficient, cost less to build and operate and are worth more to their occupants. For projects that are owner occupied, such as corporate, government and institutions, the benefits of an intelligent building provide an immediate ROI in terms of higher employee productivity and reduced operating expenses. For commercial developments, these projects are expected to result in above market rents, improved retention, higher occupancy rates, and lower operating expenses. All around, this is a win-win situation.

The decision to make a project “intelligent” needs to come early in the design process. There needs to be a commitment from the owner and their design team to invest in a project with superior performance and value.

Intelligent buildings mean many things depending on your perspective and role. The following list is one summary of these attributes.

Construction:

• Low cost, high quality, high speed construction technologies and processes;
• Building design/features that fully address occupant requirements and convenience;
• Sustainable construction practices;
• Electronic project documentation;
• Modeling extended into construction.

Acquisition of MARFEL PLC

Access Real Estate acquired MARFEL PLC, an aluminum profile company in order to have vertical integration in the supply of Aluminum Profiles of doors, windows and related aluminum products for the condominiums it is constructing in Addis Ababa.

The aluminum company acquired has great potential reflecting the ongoing construction boom of the country. The company will supply Access Real Estate as well as other construction companies and individual home builders with quality aluminum profile doors, windows, wall paneling and hand rails.

The manpower to be utilized to manage and run the aluminum profile company will be professionals with proven experience in the aluminum profile industry and competent in managing the company’s operations.