In a significant policy and legislative milestone, the Council of Ministers of the Federal Democratic Republic of Ethiopia has approved a draft Proclamation that introduces a structured legal framework permitting foreign nationals and entities to acquire immovable property under specified conditions. This landmark reform marks a pivotal shift in Ethiopia’s property ownership regime and aligns with the country’s broader economic strategy to attract foreign investment and stimulate growth in the real estate sector.
Ethiopia’s legal framework historically restricted immovable property ownership to the state and its citizens, as enshrined in Article 55(1) of the Constitution. Foreign nationals were limited to leasehold rights, with stringent exceptions under prior investment proclamations (e.g., Proclamation No. 280/2002 and No. 1180/2020), which permitted ownership solely for business-linked residential purposes. The Civil Code further barred foreign ownership, save for inheritance scenarios mandating resale to Ethiopian nationals. The new proclamation departs from this precedent, introducing a regulated pathway for foreign ownership while safeguarding national interests.
The new draft proclamation delineates specific criteria and safeguards governing foreign ownership of immovable property. Foreign nationals, excluding naturalized Ethiopians or dual citizens, are permitted to acquire residential property through leasehold or outright ownership, provided they meet a minimum investment threshold of USD 150,000 per transaction. Ownership is capped at five properties per individual, with strict prohibitions on acquisitions in border zones, government-subsidized housing projects, or properties financed through domestic loans.
Regulatory oversight is vested in the Ministry of Urban and Infrastructure, which mandates prior approval for all transactions and retains authority to adjust investment thresholds or ownership limits based on market conditions. Foreign owners gain rights such as residency permits, multi-entry visas, and repatriation of sale proceeds in foreign currency, contingent on compliance with tax obligations, payment of fees in foreign currency, and adherence to residential-use restrictions. A reciprocity clause further allows Ethiopia to apply differentiated treatment based on rights afforded to its citizens in the foreign national’s home country.
Disclaimer: This article is based on the draft proclamation submitted to the Ethiopian Parliament. The final enacted version may be subject to amendments.
For further information and updates please contact Dablo Law Firm, the LEX Africa member in Ethiopia, on info@dablolawfirm.com or visit https://dablolawfirm.com/
