The Real Estate business is one of many investment platforms these days. It is clear that this type of investment demands business consciousness and attention to different wide-ranged situations. These include, but are not limited to;
1. Understanding the land policy of the country – Land is one of the indispensable resources of this planet and requires policy framework for its usage. Accordingly, countries have different regulatory frameworks in an effort to manage this scarce resource. In the Ethiopian Constitution, it is clearly defined that land belongs to the Government and to the public at large. No one is allowed to own land as a private property. Of course, this situation happened even before the introduction of the current constitution as well. Any investment platform that aspires to get engaged in the real estate business is required to know this policy and calculate the risk mitigation ways and the profit that will possibly earn through the exercises.
2. To cope up with the property laws of the jurisdiction – Property laws of the country attracts buyers of your real estate business. A real estate investment will have no result that means you will have no buyer unless the property that you are constructing has an asset value as per the property law of the land. This is serious because of the purpose of every buyer that couldn’t avoid this property benefit.
3. To examine the supply chain policy of the trade practice – as a real estate business owner, an investor should look out of the supply chain system that should be examined point by point. More especially, the trading mechanisms and their predictability should be analyzed. A real estate investment is not a retail business that can get its small return on small investment. It requires years to build apartments. Critical supply chain trade system analysis along with the predictability of the regulatory framework requires proper attention in this regard.
Practically speaking, in Ethiopia, the real estate business started to flourish in the mid-1990s. Different corporate entities emerged in the business and some of them were not able to materialize their own word that they promised to their clients. In most cases, advance payments were collected but without success of delivery. This resulted in mistrust on the industry and has caused legal cases.
Capstone Engineering, which is one of the few Grade 1 renowned construction companies, entered into the real estate investment with a different business approach mentioned above. By using their well-known construction site delivery record in the country, they started to build their model real estates before receiving any amount from a potential buyer. This is really a huge risk and a new approach to the business.
The model apartments that they are building are very luxury and require financial backbone. According to Mr. Henok Birhanesellase, Managing Director of Capstone Engineering, this business model has a direct relation with the business integrity that Capstone Engineering has been demonstrating so far. As far as there is business integrity, there is success. According to the philosophy of his management, a company should maintain dedicated employees, well managed resources and proper vision and mission of the business.
The Diaspora Square Apartment that the company is building in the downtown of Addis Ababa is finalized with a very quality model platform. They reached to the final stage of the apartment without getting into any financial advance from the client. They started to sale when they believe that it is getting finalized. The sales policy that the company is following has a different approach since they are delivering the plot on the date of the sales of the apartment.
This type of commitment encourages clients to pay in advance if they believe that the transaction is with a corporate integrity and honesty. In line with this, companies like that of Capstone Engineering, that has integrity and reputation stand, should join the real estate business in order to have a promising real estate transaction in Ethiopia.