Market Rent Determinants of Residential Apartments in Addis Ababa, Ethiopia

Abstract

Rapid urbanisation and population growth increase the demand for housing. Given its importance to human wellbeing, the right to housing is recognised in international, regional and domestic legislation. The rental housing sector is the major form of housing tenure in Ethiopia. Given financial constraints, Ethiopian tenants tend to rent instead of buying property. However, there are no well-developed procedures that guide how rental value is determined in Ethiopia. As such, the purpose of this study is to identify monthly rent determinant variables of residential apartments in Ethiopia. Substantial empirical results from different countries indicate that rental value is a result of the combined contribution of the integrated components: property, amenities, and externalities. For this study, a multiple regression model was used for 164 samples taken from three purposefully selected case study areas in Addis Ababa (CMC, Jemo and Kazanchis). The regression results indicate that nine significant variables were determinant variables of monthly rent at a 95% confidence interval. This study may contribute decisive information for Ethiopian property managers, real estate developers, income tax assessors, real property owners, lending institutions and other interested real estate professionals. It allows these stakeholders to more accurately estimate the monthly rental value and market value of properties for their business evaluation.