Dr. Gabriella Carolini from MIT presents on how property taxation can finance inclusive and equitable infrastructure development in urban Africa.

1. Property Taxation for Equitable Urban Infrastructure
Development in African Cities
Dr. Gabriella Carolini (MIT)
Fitsum Gelaye (MIT)
Tigist Kassahun (EiABC - Addis Ababa University)
Kadeem Khan (MIT)
African Property Tax Initiative Conference – Senegal, June 2018

2. Motivation: How to finance equitable urban infrastructure development?
Capital investments financed:
 External loans (WB, China
EXIM, etc)
 Public-private partnerships
 Privatization
Operations and Maintenance:
 General budgets
 User fees
Challenges:
 Accountability to whom?
 Pay-off terms
 Logic of efficiencies override
logic of equity

3. Interest in Property Tax…
● Central to general budget
or specialized funds
available for operations
and maintenance
● Central to securing
municipal finance through
subnational debt markets
for capital investments
● Local accountability and
potentialities of more
democratic distribution of
services

4. property tax and
infrastructure systems:
Improving infrastructure’s reach AND tax collection

5. Dispelling the Myth of ‘Urban Underdevelopment’ in Africa, while acknowledging
serious social and service inequities in urban areas
● African cities beyond
“chaos” theory - real
estate development with
downturn in other regions
and resource boom in
SSA.
● Aspirational plans for
urban transformation
but 60% of urban
population still living
with substandard
services in SSA.

6. THE CASE OF ADDIS ABABA, ETHIOPIA

7. About Addis Ababa
● 0ver 4 million Residents
● 203.5 mi²
● Per Capita Income almost
doubled from 788.48 USD in
2010 to 1,359 USD in 2015
● Majority of jobs are in Trades,
Manufacturing and
Construction
● First Light Rail System and
Waste to Energy Plant in SSA
● BUT…no “modern” property tax
regime (nominal “Roof tax”
instead).

8. Fiscal Administrative vs Infrastructure Admin Units
Sub-cities, Woredas, Kebeles Water Branches

9. RE Developer Median sales price per square meter (USD)
Tsehay Real Estate 1,219.95
Noah Real Estate 979.65
Hassenias Real Estate 689.96
Flintstone Real Estate 667.78
Median 834.81
This construction boom has significantly influenced the price of land. For
instance in a square meter of land in Addis Ketema Sub City costs as much
as a sq meter of land in Geneva.
Addis is undergoing an unprecedented construction boom

10. ● Only 20-30% of the city has
access to proper liquid waste
collection. (World Bank
2015)
● The water coverage in the
city is over 99.8% percent,
but supply is intermittent
with some sub-cities having
access to water for only 12
hours a day for less than
three days per week. (World
Bank + AAWSA 2017)
● Most basic service
infrastructure capital
projects are still funded by
external sources.
The construction boom provides untapped potential for own-source
revenue to alleviate social and service inequalities

11. Objective: Understand potential of property tax as resource for equitable infrastructure development
Kernel Density Heat Map of High Rise Construction
Population Estimates for 2016/17
Source: Ethiopian Central Statistics Agency
Existing and Proposed Sewerage Grid
Source: Addis Ababa Water and Sewerage Authority
Water Supply Situation
Source: Addis Ababa Water and Sewerage Authority
Network of
Main Roads
THREE PHASES OF WORK:
● Visualize extant construction
boom, infrastructure networks,
and building typologies
● Sample property sales and/or
rental prices to estimate values
for potential property tax
revenue.
● Examine precedents of
valuation and collection in
other countries and
experiment with a model
which leverages construction
boom to enhance equitable
infrastructure.

12. PART I:
Visualizing and Describing the Construction
Boom and Infrastructure in Addis Ababa

13. Increase in Addis Ababa’s built environment over three decades
Map Source - Atlas of Urban Expansion
Built up area between 1986-2000 Built up area between 2000-2010

14. Mapping new construction in Addis Ababa since 2010 to identify “hot spots”
Location of New High Rise Buildings in Addis Kernel Density Heat Map of High Rise Construction

15. Creating profiles for each sub-city to better understand
construction booms at more granular level
Location of New High Rise Buildings Lideta Sub-City Location of New High Rise Buildings Arada Sub-City

16. Comparing spatial patterns of different building typologies
Location of New High Rise Buildings in Selected Kabele, Gulele Sub-City Location of New Single-Family Homes in Selected Kabele, Gulele Sub-City

17. Identifying locations of buildings in the city’s biggest housing project
(“condominiums”).
Location of Condominium Project Sites
from the Integrated Housing Development
Project plan.

18. Our data shows that Bole, Nifas Silk and Kirkos experienced the greatest amount
of high rise construction since 2010
Location of New High Rise Buildings in Addis Number of New High Rises in Each Sub-city
Notes: Circles are sized by number of high rises

19. Most of the sub-cities in Addis experienced less high rise construction than the
largest Kebele in Nifas Silk
Number of New High Rises in Each Kebele and Sub-city
Notes: Each block
represents a Kebele;
Blocks are sized by
number of high rises

20. However, in terms construction of high rise buildings, smaller, centrally located sub-
cities have significantly higher density of new high rises
Location of New High Rise Buildings in Addis Sub-cities Ranked by Density of New High Rises
Notes: Circles represent Kebeles;
Circles are sized by number of high rises; colors correspond to the map

21. Comparing location trends: Population vs New Construction
Location of New High Rise Buildings Gulele Sub-CityPopulation in Gulele Sub-City

22. Spatializing
Infrastructure Projects
- Sewerage grids
(extant and proposed)

23. Spatializing
Infrastructure Projects
- Water supply status

24. Existing Sewer Lines
Proposed Sewer Lines - Stage 1
Proposed Sewer Lines - Stage 2
Data demonstrates significant overlap in construction boom and
infrastructure, with a few notable outliers (esp re population estimates)
Road Network Sewerage
Data Source - Addis Ababa Water and Sewerage Authority +
Addis Ababa city Administration
Population

25. PART II:
Sampling Rental and Sales Data

26. We have thus far collected:
1. Construction permits data for the past decade from the Addis Ababa Construction
and Permit Control Authority
■ E.g., In 2017, 783 permits for high-rise building construction (including building
additions) issued.
2. Sales data from six Real Estate Developers (for high-rise luxury residential
apartments)
3. High-rise rental data for commercial properties collected by in-person survey (72
properties, mainly in Bole, Nifas Silk, Yeka)
4. Rental and sales data points from Online Listings (FaceBook, Betoch) – 500+ plus
■ E.g. FB: 115 rentals; Betoch: 425 rentals; 371 sales data from Betoch)
Property Data Gathered: Sources for Residential and Commercial
Properties

27. Property Data Typology: By Sub-cities and Neighborhoods
Real Estate Information
Sources
Sub-Cities Dominantly
Serviced Particular Neighborhoods Serviced Typology
Teshay Real Estate Bole CMC Luxury Apartments
Flintstone Real Estate Bole, Yeka, Lideta
Summit, Mexico, Olympia,Zobel,
Megenagna Apartments, Single Family Homes
Noah Real Estate Bole CMC, Summit Luxury Apartments
Betoch Ethiopian
Property Portal Bole, Nifas Silk, Arada
CMC, Lebu, Jemo, Piassa, Bole,
Ayat, Old Airport
Apartments, Single Family
Homes, Commercial
Addis Home Locator
(Facebook) Bole, Nifas Silk, Arada
CMC, Lebu, Jemo, British Embassy,
Bole, Ayat Apartments, Single Family Homes
Addis Apartment Offices
(Facebook) Bole, Nifas Silk CMC, Lebu
Apartments, Single Family
Homes, Commercial
Trendhope Real Estate Bole, Yeka CMC Single Family Homes
Hacomal Real Estate Bole, Nifas Silk, Kirkos Lafto , Meskel Plaza , Kasanchis Luxury Apartments
Own Ground-Truthing Bole, Nifas Silk, Yeka
Lebu, Summit, Ayat, Jemo, Bisrate
Gebriel, Bole Commercial

28. Property data: Commercial rental spaces in hotspots
Neighborhood Sub city
Minimum Price (USD) per
sq. meter
Maximum Price (USD)
per sq. meter Average
Ayat Bole 5.4 18.2 12.3
CMC Bole 6.6 8.3 7.8
Megenagna Bole 6 16.4 11.31
Bole Bole 7.3 23.7 15.24
Bole Medhanialem Bole 9 42 18.53
Jemo Nifas Silk 4.5 11 7.7
Lebu Nifas Silk 5.8 7.2 6.5
Lideta Lideta Sub city 9.5 20 15
Mercato Addis Ketema 18.23 91 43.8
Churchill Arada 10.2 20 14.5
Source - ground truthing by project team
1 USD = 27.42 Ethiopian Birr

29. Property data: 3-bedroom apartment sales
Real Estate Information
Sources
Average Price per sq.
meter
Sub-Cities Dominantly
Serviced
Particular Neighborhoods Serviced
Teshay Real Estate
1,219
Bole Summit
Flintstone Real Estate
668
Bole, Yeka, Lideta
Summit, Mexico, Olympia,Zobel,
Megenagna
Noah Real Estate
979
Bole CMC, Summit
Trendhope Real Estate 693 Bole, Yeka CMC
Hacomal Real Estate 1,100 Bole, Nifas Silk, Kirkos Lafto , Meskel Plaza , Kasanchis
Hassenias Realestate 689 -- --
Source: Teshay Real Estate, Flintstone Real Estate, Noah Real Estate, Trendhope Real Estate, Hacomal Real Estate,
Hassenias Real Estate

30. Connecting with government reform & planning
- Chief Advisor for the Minister of Urban Development and Housing
e.g. piloting property tax reform in secondary cities first (Dire
Dawa, Bahir Dar, Mekele)
- Addis Ababa Planning Commission and the Addis Ababa City Administration
- Master plans and cadastre updating
- Addis Ababa Water and Sewerage Authority
- System expansion plans

31. Challenges on the ground…
Sales and rental price variation
• How do local “landmarks” and location matter to price?
Developer stability and prices
• Do buildings have “reputations”?
Spatial regression modeling errors
• Can we use ICT to build a reliable but simple spatial
model of building types as first pass toward better
valuation and collection?

32. NEXT STEPS:
Phase III
● Continuing to map
construction of different
building types, property rents
and sales, population growth,
and infrastructure systems.
● Improving sampling
methodology for estimating
tax potential that can be
applied in Addis (and
potentially other cities) as a
means to ‘democratize’ urban
infrastructure development.

33. Amesegenalehu/merci/thanks