Somaliland: Residential and commercial real estate booms in Hargeisa

[Jacaylbaro]

Situated behind Hargeisa's Freedom Square is the city's first ever housing subdivision where a team of builders is putting the final touches on 36 new multi-bedroom homes.

 

This housing venture is the latest among a number of residential and commercial properties popping up in Hargeisa and to a lesser extent in Burao, Borama and Berbera.

 

Data on the number of new houses and properties across Somaliland are hard to come by since the regional administration lacks a land ministry and a regularly updated land registry.

 

Nonetheless, Rabile Omar, director of land and planning at the Hargeisa Municipal Council, said in the past couple of years there has been a surge in the construction of both residential and commercial properties in the city.

 

"In the past nine months alone, the number of properties developed across the municipality has surpassed the number of properties developed in 2011 by 20%," Omar told Sabahi.

 

He said that due to increased demand for land, the municipality has in the past year expanded and created three new districts on the periphery of the city, bringing the total number of districts in Hargeisa to eight.

 

"The increase in construction of houses is across all districts," Omar said. "For instance, in Koodbur and Ahmed Dagah districts, 315 residential housing units were created in nine months, as well as 688 in Morodhi Jeh and Ga'an Libah districts."

 

Hassan Jama Yey, director of Lucky Star, a leading construction company in Somaliland, said most of the new construction has been concentrated in the city centre. More office buildings and retail shopping centres have been built in the past two years than at any other time in the city's history, he said.

 

"Hargeisa has not seen this before," he told Sabahi. "The demand for commercial buildings has increased and [orders] come with styles and specifications we are trying to meet."

 

Most of the property developers are Somaliland natives, while some are from the Somali diaspora taking advantage of the relative stability and real estate boom.

 

Hassan Ahmed Bahsaney, a Hargeisa-based developer who has been in business for more than two decades, said investors have enjoyed strong returns in Somaliland.

 

Residents who bought land immediately after the civil war have particularly benefited from the real estate boom because they had purchased below market cost, he said. "A [30 square metres] piece of land I bought for $300 in 1992 now is valued at $60,000," Bahsaney told Sabahi.

 

Lots now come at a high premium, especially in the city centre, where the limited supply has inspired developers to bid on old buildings that can be demolished and rebuilt, he said. "There is an old building in the city whose value two years ago was $600,000, but now I am told its asking price is $1,000,000," he said.

 

 

Attracting foreign investors

 

Despite the investment opportunities, many international investors remain hesitant to enter a market that has witnessed instability for so many years. But for local investors, construction is the safest and best proven way to make a profit, said real estate agent Nassir Hussein.

 

"You see we do not have Citibank or Barclays and the only safe venture for locals to invest in is land and property," he told Sabahi.

 

Ahmed Abdi, an economist who teaches at the University of Hargeisa, says Somaliland provides a multitude of opportunities for any foreign investor armed with the right information.

 

The region is blessed with natural resources such as coal and raw materials to make cement, yet the outside world is unaware of the substantial profit margins that could be gained, he said.

 

To woo investors, the government should publicise these opportunities and Somaliland's trade policies more aggressively, Abdi said.

 

"[For example], all cement currently used in Somaliland is imported from Asia and Middle East countries and it is becoming expensive because of the boom," Abdi told Sabahi. "If an investor revives the cement factory in Berbera, he will be guaranteed of recouping his investment and making profits because the demand for cement is so high and he will not face competition locally."

 

But Salad Abdi Ige, director general at the Ministry of Industries, said the administration has already embarked on a number of measures to attract investors, including targeted tax breaks.

 

"We have eased the process of obtaining licences to invest and all the paperwork involved," he told Sabahi. "We will also help the investor find land to build a factory."

 

He said the administration is targeting investors from the Middle East because of their geographical proximity, which can facilitate the transport of any needed equipment or labour force.

 

Ige said new foreign capital could help expedite the creation of new jobs and ease the unemployment rate, which is especially high among youth.

 

 

Source: Sabahi Online

[Jacaylbaro]