In a landmark move to open up Ethiopia’s economy and attract foreign investment, the House of People’s Representatives has passed Proclamation No. 1388/2025, granting foreign nationals the right to own residential property in the country for the first time in decades.
What the New Law Says
Under the newly approved legislation, foreign individuals (and their immediate family members) are now allowed to purchase homes in Ethiopia, with a minimum investment threshold of USD $150,000. While the reform does not permit foreign ownership of land, it grants full ownership rights over residential structures built on state-leased land a model that has defined Ethiopian real estate law since the early 1990s.
The Council of Ministers unanimously approved the bill, signaling a strategic shift in Ethiopia’s long-standing policy of tightly controlled land and property ownership.
What This Means for Foreign Investors
This legal reform offers a clear and secure framework for diaspora members and international investors looking to enter Ethiopia’s housing market particularly in major urban centers like Addis Ababa.
However, the law excludes participation in real estate business operations such as property development and resale for commercial purposes. The goal, according to Professor Mohamed Abdo, Chair of the Urban Development Committee, is to promote stable, long-term residential investment without contributing to price inflation or market speculation.
Beyond Addis: Regional Opportunities
While much of the attention has been on Addis Ababa, where property prices are already high, the new law encourages wider access across other urban areas, with implementation guided by regional governments, in line with Ethiopia’s federal system.
This means new opportunities may arise in fast-growing cities like Hawassa, Bahir Dar, Dire Dawa, and Mekelle offering more affordable entry points and untapped investment potential.
Cautious Optimism
Though the $150,000 threshold may seem low by global standards, it is strategically aligned with Ethiopia’s current housing values and is expected to be reviewed over time. Lawmakers have emphasized the need to protect Ethiopian families from being priced out of their own housing market, making safeguards and balanced regulation a key part of the law's implementation.
A Step Toward Economic Reform
This change is part of Prime Minister Abiy Ahmed’s broader economic liberalization agenda, which includes recent reforms in the telecom and banking sectors. By allowing foreign homeownership, Ethiopia is signaling its intent to become a more open, investment-friendly economy, while still preserving public ownership of land and national interests.
Interested in Investing in Ethiopia?
At Live Ethio, we are prepared to guide diaspora clients and foreign nationals through the legal, financial, and practical steps of acquiring residential property in Ethiopia. Whether you're planning to retire back home, buy a family home, or simply reconnect with your roots, now is the time to explore your options.
Source: Birrmetrics and Ethiopian Business Review
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