The rental market in an industrialising city

Policy brief Firms and Trade

  • A key policy objective of the Ethiopian government is to accelerate industrialisation through the creation of several industrial parks across the country. An ongoing IGC project in Hawassa Industrial Park shows the role of housing shortages and rental prices in triggering worker absenteeism and turnover.
  • We conduct quantitative surveys to explore the housing market in the city and how it interacts with the changing industrial landscape of the city.
  • Using these three sets of surveys, we produce the first in-depth quantitative picture of the housing stock in Hawassa city and provide evidence on the institutional links and relationships between homeowners and workers of the park.
  • We find that while rental prices have increased over time in nominal terms, they seem to have remained stable after controlling for inflation. We do not find evidence of market concentration in the rental housing market, and, instead, rental market appears to be competitive with numerous small players supplying the vast majority of houses in the market. Housing quality also appears to be largely homogenous.
  • We also find that access to credit is the major constraint landlords faced in their desire to expand the supply of housing. Relaxing credit constraints may thus lead to increased supply of housing units in the city.