The cost of owning property in Mogadishu is high. No one feels this more than the investors and customers
There has been tremendous growth in the real estate sector in Mogadishu. Both high end and affordable residential properties are coming up in every corner of the city, mixed use property that contain both commercial and residential houses such as self-contained villages and apartment blocks are the norm in the city and large scale development like the 14 storey hotel coming up by the beach are no longer raising eyebrows. This should be good news, but it is not entirely so.
Of late, property prices in the city have doubled and tripled and done many other things except go reduce. Majority of the local city residents, foreign investors in the country and diaspora investors are worried about the steep cost of owning property in the city. Many delay the dream of owning property as they source for capital. For the people who rent houses or villas or office space, the monthly rent is burdensomely high.
The cost of living in Mogadishu is comparable to those of other world cities, but the cost of proper housing as an aspect of the cost of living is a different thing. Good apartments are not cheap in Mogadishu, the prices of villas is not family friendly, hotel accommodation even more so -in a cumulative sense- and the cost of owning or renting commercial property/ space is a headache businessmen deal with daily.
As real estate investment in Mogadishu increase and the demand for housing is met, princes will go down. At the moment, high prices are the words on buyer’s lips. Figures from different sources indicate that a 1 bedroom apartment in Mogadishu City averagely goes for $66 per month, while the same 1 bedroom outside the city goes for $28 per month, a slightly lower charge. A 3 bedroom apartment at the city center goes for $500 per month, while the same goes for $100 outside the city.
Utility costs are high compared to what utility bills cost in other world cities. Basic electricity in Mogadishu is anything from $35 to $48 a month on an 85 square meters of an apartment. This bill is high due to the high electricity needs of the city such as cooling. Garbage disposal costs, water and heating drive up utility bills.
In city hotels, a Bed and Breakfast single deluxe room goes for $50-bed, one or two chairs and other room amenities, a double room goes for $70-bed, sitting area with a sofa set and other hotel amenities-and a family room goes for $100, with a sofa set sitting area, four or three beds and other amenities.
When it comes to purchasing apartments, the price per square meter for an apartment in the city is $1,250 while the price outside the city is $360. These are property listing prices.
A villa out of the city that sits on 2015 square feet and has 6 bedrooms and 3 bathrooms goes for $45,000, a multi-family home that sits on 400 square feet goes for $20,000 and so goes the rates for single family homes, villas, townhouses and multi-family homes. In general, according to Datagrid Somalia- a research firm based in the city, as of 2015 (and this must have changed a bit by now), the average price of a house per square meter was $450. To rent a formal unit, one had to be willing to pay up-to $500.
Various factors explain the high costs; demand for housing at the moment being high is one. Others include Mogadishu still being considered a high risk area when it comes to real estate investment due to the precarious security situation in the city. Investors put up properties knowing that they can be destroyed by terrorist elements. To balance the risk, the prices have to be high. High cost of construction due to the fact that labour, especially engineers, surveyors and project managers tend to be external hires who are brought into the country from Turkey or Dubai or Kenya is another factor. Also, the cost of building materials is high since most of it is imported.
In 2014, Salaam Properties, a real estate development company was formed with the sole objective of addressing the issue of demand and supply of proper housing. The goal of the company was to construct modern, well designed and serviced apartments to offer competitive property prices in the city. They are the developers of Daru Salaam City, a housing project that comprises of 6,000 units, developed in three phases with the first phase handling 500 units. The capital investment in the project as a whole is said to have been $20 million.
Another housing project of almost similar calibre is the Jazeera Estate which is located a few (3) kilometres from the main airport. The gated community development should have slightly over 1,200 apartments, a number of townhouses and villas. Also within its fences should be commercial and public social facilities. Information from the Somali Real Estate Association indicates that the two property developments on their own have the strength to increase the existing properties in Mogadishu by over 10,200 units. This is hoped to help reduce housing prices.