Determinants of Commercial Real Estate Market Performance: The Case of Addis Ababa, Ethiopia

Numerous social and economic problems are brought on by urbanisation, including worse-than-ever housing shortages in emerging nations and an increase in the number of people living unlawfully in slums without permits or property rights. This is also applicable to Ethiopia. The investigation of the factors influencing Addis Ababa’s commercial real estate market performance was the study’s principal goal. Explanatory sequential mixed method design was used in the study, which took a mixed research strategy. Senior specialists, top business leaders, and other professionals from 35 commercial real estate developers active in Addis Abeba made up the study sample for the quantitative phase. It was decided to employ 163 of the 231 structured and self-administered sets of questions that were provided. This resulted in an actual response rate of 71%, which was deemed both necessary and sufficient for running the relevant statistical analyses. 15 key informants from important government ministries or agencies, as well as relevant industrial sectors, were chosen to participate in in-depth interviews for the qualitative phase of the study. Only ten significant informants, however, volunteered to be interviewed. The quantitative study’s findings revealed that every factor—firm efficiency, supplier dependability, and customer purchase intentions, as well as credit availability, marketing strategy, legal considerations, land availability, infrastructure development, technological adoption, and leadership quality—had a significant and positive impact on Addis Ababa’s commercial real estate market performance. The qualitative analysis found that additional variables such as political and economic instability, the degree of coordination and stakeholder participation, political interference, and house purchasers’ purchasing power influenced commercial real estate performance. To improve performance, the researcher suggests that real estate enterprises adopt an effective strategy that focuses on performance-improving variables and collaborate closely with the government and other stakeholders. Finally, the proposed framework for measuring performance in the commercial real estate business should guide commercial real estate developers.