PURPOSE: As the youngest ever Chairman of the Cass Real Estate Society, I am a 21-year-old passionate, well informed and driven Post Graduate student who has been granted the privilege of being an Ethiopian, whilst being born and educated in London. Holding a position such as the Chairman of the Cass Real Estate Society enables me to analyse and assess the appetite of investors, but one thing I have realised is that Ethiopia is the best kept secret within the global real estate industry, I believe it is my duty to invest the knowledge I have developed about the real estate investment industry for the primary development of the Ethiopian economy. The reason for this specific proposed topic, is firstly, due to my sincere passion as an Ethiopian to actually delve deeper into this growing industry of the private equity model in Ethiopian Real Estate, and whether there is actually growing benefit to the Ethiopian population both from an economic, and a social perception, whilst delving into the intriguing question, as to what this model of investment holds for Ethiopia in the next 10-20 years. It is a topic that has been expounded, but not by an actual Ethiopian who has a passion to understand how sustainable this investment model will be for the Ethiopian population. This coupled with my interest to see how a growing economic system such as Ethiopia’s would react to such a specialised investment model into real estate investment, and whether the actual financial industry would embrace this level of investment sophistication.

DESIGN / METHODOLOGY: From critically analysing various research sources, and consulting senior professionals within the Ethiopian real estate industry, the trend is that real estate private equity will reduce in the level of investment capital, until there is progressive development of the country’s private sector. However, trends also highlight that private equity firms will begin to increase their investment in neighbouring countries, and this trend would also be assessed on the basis of comparison between different countries in Sub Saharan countries and their capacity to embrace real estate private equity investment. In addition, the question as to why the current governmental structure has not embraced and implemented investment friendly regulations creates a question as to whether investing into Ethiopia would be sustainable for private equity firms.

The method I utilised is based on three key research techniques. Firstly, interviewing 70 active investors within the real estate industry within Africa, with 10 key contacts within the real estate private equity industry. From these sources, I conducted informal qualitative interviews, to assess how deals are structured differently within the Ethiopian real estate industry. I also gathered their thoughts on what developments would be needed for their current holdings within Ethiopia to enhance in investment value. I also have had access to the Ethiopian Ambassador to the United Kingdom, which shared invaluable information on the implications of private equity in Ethiopia.

FINDINGS: There are various findings from this research, one of many is the sheer distance that real estate private equity investment creates for the Ethiopian, and how it adds to the class segregation, due to the sheer lack of understanding and the level of sophistication of the investment model. In addition, there were findings that highlighted how corruptive private equity could be, due to the method of foreign private equity firms holding knowledge only at the top hierarchy. There were findings that reinforced the benefits of foreign credible Universities which have developed finance teaching capacities, to conduct short courses in partnership with the Ethiopian Government on models such as private equity, which would create awareness, as well as develop the financial “intellectual capacity” of the country. For institutions such as Harvard University, Cambridge and Oxford University to partner with the domestic Universities in Ethiopia with the intention of developing the country’s training of the financial world.

RESEARCH QUESTIONS / LIMITATIONS: The key questions that would be answered by this body of research will be following:

How is the real estate private equity market being structured, expanded and executed in Ethiopia, (the limitations and advantages of this model of investment into a growth nation)?

Is the real estate private equity market actually a subsidy to the Ethiopian population (How can it be utilised to solve levels of deprivation within the country)?

How sustainable is this current overflow in foreign capital into the Ethiopian real estate market, would it actually be economically beneficial to the country in the next 10-20 years, and whether the actual benefits are centralised?

How can the Ethiopian Government create a private equity scheme which enables foreign private equity firms investing into Ethiopia, to provide community development as one form of paying corporate taxes i.e. enhancing the primary, secondary and graduate / post graduate educational system, i.e. training schemes for aspiring entrepreneurs, i.e. think tanks / idea incubators for the main purpose of inspiring creativity and developing a budding entrepreneurial nation?

After thorough research, I have added the emergence of real estate venture capital investment into the research topic, as I believe that this would provide a more diverse method of comparing the emergence of real estate private equity against real estate venture capital. I can then utilise these two investment methods and assess which would be most sustainable for the Ethiopian economy in the long term, as one argues for more of a corporate and sophisticated investment approach, whilst the latter reinforces an entrepreneurial take on the Ethiopian start up enterprise industry.

PRACTICAL IMPLICATIONS: The research reveals a numerous amount of practical implications. Firstly, how the private equity industry that is slowly progressing in Ethiopia must do more for the actual Ethiopian community, as opposed to capitalising on companies that lack knowledge of the private equity model. In addition, the need for robust financial education in the educational system. There must be an incorporation of how the financial system operates and how the financial dynamic of the country is changing. This will develop a level of understanding among graduates that can assist them to embark on interesting career paths. Also, the need for close inspection of private equity deals, and the need for private equity firms to actually conduct robust training and contribute to the employees, as a pose to keeping them lower down the hierarchy simply for man power.

ORIGINALITY / VALUE OF WORK: The research project is highly original due to the fact that the concept of real estate private equity within Ethiopia has not been researched or written about within a research context. This provides a unique and compelling opportunity to shine the spotlight on the real estate private equity investment model and to answer the current debate in Sub Saharan Africa as to what the most sustainable investment models are for such a flourishing nation such as Ethiopia. The value of the work speaks of academic excellence. The sheer value that this piece of research could create can be judged from a political as well as an economic development perspective. The value of the research will be timely, as more than 40 conferences commence specifically regarding private equity in Africa per annum, and this research would provide an exceptional foundation to build upon whilst providing real estate investors with a more conscious understanding as to how they can develop the country as well as create wealth from it. The research will be presented more so as a guideline on how to actually utilise real estate private equity in Ethiopia. This is a one of the most sophisticated investment models, in such a delicate season of the Ethiopian economy, therefore concluding with the statement “are the two meant to be?”. In simple terms, the research project would answer this question “how can we take real estate private equity in Ethiopia, and develop the lay man or lay woman in Ethiopia?”. I believe by answering this question, we could utilise this investment model to pioneer the country with Ethiopians themselves pioneering the race.