Challenges and opportunities in the real estate sector in Somalia: Introduction


Somalia

Somalia is moving toward recovery after 23 years of civil strife and an unprecedented state, a new government dispensation, and the considerable challenges faced by the epitome of a fragile post-conflict state. The nation’s current infrastructure is completely destroyed in the civil war. However, significant changes are occurring after the involvement of the Turkish government in the infrastructure development in Mogadishu and other areas in Somalia. The demand for land, houses, roads, health and education facilities, and so on, in the entire country demonstrates the positive prospects of the property markets in Somalia. This paper is the introduction of a five-article series about property markets in Somalia, and this paper reviews the current scenario in land ownership, land prices, and build-then-sell (BTS) houses in Mogadishu.

Post-conflict land ownership
The land questions in Somalia are common, and the process of developing housing schemes and urban spaces is unclear until today. (1) Somalia established its first formal land policies under colonial regimes, and both British and Italians considered the land ownership for the Somali people. However, the colonial ethics are superior. The first Somali-owned land policies were drafted in 1966 by the Land Reform Commission but were not passed in the parliament. However, the military regime passed the number of land policies and regulations and regarded land as a public asset held by the government in trust for the Somali people. The passed regulations have induced uncertainty and insecurity for both urban and agriculture farms because of the unfairness of the government land management and distribution.



The lack of legislation and urban policy in the country primarily hinders urbanization and real-estate investment. In the past, the Ministry of Housing And Public Works has introduced the first initiative of low-cost housing, but the state has collapsed prior to the implementation of these attempts. Indeed, the military government has developed different housing schemes for civil servants and army commanders in various locations in Mogadishu and other cities. In the private sector, until today no success story for housing schemes exists aside from the BTS houses that are spread all over Somalia. In recent years, some traders have announced their interest in investing in new housing schemes in the entire nation, but most of these announcements are only ambitions, except for the recently completed apartments in Hodan District, the Safari apartment and newly announced Darasalam City outside Mogadishu (7,700 meters north of Yaqshid District).

Land prices in large towns, particularly in Mogadishu (see Table 1), are the key point of the real-estate market transformation in Somalia. The demand for affordable housing schemes for both public and private sector is a growing market with some risks involved. However, the foreign direct investment regulations that are expected to contribute to the emerging real estate markets are anticipated to reduce the risk expectations of local investors.

Land prices in Mogadishu
Mogadishu is the preferred place of most Somalis; it has a unique weather, and most of the people have invested in this city as a capital. The land prices for different areas in Mogadishu are not in the same range; the inner city has the most expensive neighborhoods, whereas outside corners are more affordable.. The availability of public infrastructure in both inside and outside lands is similar. (2) Land prices depend on various factors, such as political stability, peace, and urbanization growth. Recently, four different factors have contributed to the substantially increasing land prices in Mogadishu after the first quarter of 2010. These factors are pirate ransoms, non-governmental organizations (NGO), (3) Somali diaspora, and speculations of land brokers.

Although land owners have the rights to sell and buy their property, the lack of government involvement has induced massive problems in the future expansion of the city and public spaces. (4) Until today, land ownership in Somalia consists of only two categories, namely, permanently and temporarily. (5) Table 2 explains the price development of one piece of land that is located in Maka Al-Mukrama Street for the past five years.

Traditional housing developers (BTS)
Traders and small business owners invest some of their wealth in small houses and then sell them to others. These types of houses have both advantages and disadvantages (see Table 3). The market of BTS houses has boomed since the ousting of Islamist militants from Mogadishu and surrounding regions in 2011. BTS housing has contributed to the urbanization of most Somalian cities and spurred massive competition among Somali diaspora. Those who are part of Somali diaspora still have families in Somalia. Thus, most of them have been forced to buy properties in Somalia.

These ownerships send hope to the future of property investments in the nation. The growing property market in Somalia depends on political stability and regulations. Indeed, privatized public services, such as electricity, water, telecommunications, and waste management, will delay the trust of foreign investors because public infrastructures will increase the benefits of property investors. The next article will reveal the types of land ownership, regulations, and role of municipalities in Somalia. The fourth article introduces the process of real estate development in post-conflict states.

References:

Catherine, B. (1989). Land Tenure in the Middle Jubba: Customary Tenure and the Effect of Land Registration (pp. 105): Land Tenure Center, University of Wisconsin-Madison. Regional Housing and Urban Development Office (RHUDO) (1989), Report on the administration and proposed reorganization of the lands office of the municipality of Mogadishu Somalia.
1. Land ownership and leasing procedures are complicated. Details of land leasing will appear in the third article of this series.
2. Public infrastructures in Mogadishu do not exist; water, electricity, and waste management are privatized, and their services are insufficient.
3.The NGO big bosses in 2010–2013 distributed food and other necessities for the displaced and refugees, and most of their work lacks transparency.
4. All lands that were distributed after 1991 are common in Mogadishu. Land spaces were normalized at 15M x 20M, and roads were 10 M. Public spaces are unavailable, such as police station, school, mosque, and so on, and even if they are, the space they occupy is small.
5. The second paper reviews the land ownership process.
6. Foremen in Somalia are the kings of both traditional and modern construction because of the absence of an engineering society and construction regulations. Most of the clients are unfamiliar with construction firms, and those who are familiar with construction firms lack the willingness to pay the engineering fees; thus, they negotiate with foremen instead. Most foremen are illiterate in engineering languages, but they know how to build blocks and stones with measurements and levelling.



Dr. Sharif Yusuf
Construction industry expert

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