The Recuperating Landscape of Mogadishu: Rising Demand for Affordable Housing

1. Introduction

Mogadishu, the bustling capital of Somalia, is a recovering city after several decades of civil unrest. As a place with vibrant culture and commerce, the rising demand for affordable housing is reshaping the city’s landscape. There is a challenge in the city where the booming population intersects with the pressing need for affordable shelter. The surging rent prices in the city have far outpaced the modest growth in the average citizen’s monthly income, which made steady growth for the past decade. As rents soar, many residents, particularly those with limited financial means, find themselves struggling to secure suitable accommodation. Notably, this stark disparity between income and housing costs has fueled the urgent need for affordable housing options. Moreover, the gap between housing costs and citizens’ income levels has widened, particularly with increasing rent prices. This underscores the pressing issue that the city faces as it grapples with the rising cost of living, making it imperative for Mogadishu to address these growing housing costs that align with the financial realities of its citizens.

2. Factors driving demand for housing 

The growth of a burgeoning middle class in Mogadishu has greater purchasing power and is looking for improved living standards, spurring demand for modern and affordable housing options. Thus, the increasing demand for affordable housing in Mogadishu is influenced by a multitude of factors, reflecting the evolving dynamics of the city and the aspirations of its residents. Some of the key contributors to this rising demand include:

1. Population Growth: Mogadishu’s population has been steadily increasing due to natural population growth and the return of Somalis from abroad. As the city becomes a vibrant hub, more people are drawn to it, intensifying the need for housing. The Somali diaspora, who left during the conflict, is gradually returning to the country and take a pivotal role in economic and political activities. These returned citizens contribute to the demand for housing options that meet international standards and affordability.
2. Rural-to-urban migration: The prolonged conflict in Somalia led to the displacement of many people, forcing them to seek refuge in urban areas, particularly Mogadishu. In addition, the people are displaced due to environmentally induced factors, such as climate change, that adversely affect environmentally susceptible sectors that provide their livelihoods. This displacement created a surge in the urban population, informal settlements, and an increased demand for housing. Also, the city’s educational institutions, including universities and schools, attract students from various regions of Somalia. These students, as well as educators, contribute to the demand for housing in the city.
3. Economic Opportunities: The speeding up of the economic recovery of Mogadishu and the expansion of various industries have made the city a magnet for job seekers. As the city generates employment opportunities, it attracts individuals from across the country in search of better livelihoods. Additionally, the business sector of the city is thriving, with a surge in entrepreneurship and small enterprises, which has led to increased demand for skilled and unskilled labor.
4. Urban Development and stability: As Mogadishu undergoes urban development and modernization, the housing landscape is evolving. Many people are looking for housing that combines contemporary amenities with affordability. Additionally, the improving security situation in Mogadishu has increased the city’s appeal, making it a more attractive place to live, work, and invest. Although this positive perception contributes to the growing demand for housing, the distribution of the stable zones in the capital city is uneven, which makes some villages more expensive compared to others. On top of that, the level of infrastructure development in different areas of the city greatly impacts housing costs. Improved infrastructure, such as well-maintained roads, public transportation, and access to utilities, is associated with higher property values.

3. Supply-side factors for housing 

Besides, Mogadishu faces a substantial housing supply deficit. The existing housing stock is insufficient to cater to the growing population and the increasing demand for modern, affordable homes. The escalating demand for affordable housing in Mogadishu is not only driven by factors on the demand side but also by several supply-side factors. These factors reflect the complex challenges and opportunities faced by real estate developers, local authorities, and other stakeholders in meeting the housing needs of the city. The supply-side factors are included by these:

1. Real estate property prices: One of the most significant factors is the limited availability of land within the city. As more people move in and land becomes scarcer, prices rise, pushing property costs upward. Notwithstanding, the significantly higher land prices in Mogadishu compared to many neighbouring capital cities is a notable trend that reflects burden. 
2. Construction Costs: The reliance on imported construction materials and labor has led to relatively high construction costs. It is essential to explore alternative construction methods and identify local sources of materials. This might involve investing in training and skill development for the local workforce, promoting the use of sustainable and locally available building materials, and creating incentives for domestic production.
3. Finance and Investment: The available financing and investment in the real estate sector is another challenge. A lack of accessible financing options can impede the construction of affordable housing. The willingness of local and international investors to engage in affordable housing projects is still minimal. When investors are confident in the market and see opportunities for returns, they are more likely to fund housing developments.
4. Bureaucratic and regulatory barriers: The approval process for housing projects can slow down development and increase costs. In Mogadishu, there are significant challenges that can hinder the growth of the real estate sector and limit the supply of affordable housing. Specifically, regulatory fees, including application charges for various permits, can be prohibitively high. These costs can significantly increase the overall expenses of a housing project.

4. Conclusion

As the city experiences rapid urbanization and population growth, it falls upon the government to formulate and implement policies and initiatives that promote affordable housing options for its residents. This includes strategies to incentivize the construction of cheap housing units, encourage private sector involvement in affordable housing projects, and reduce administrative challenges to make homeownership more accessible to low and middle-income families. As Mogadishu continues to evolve, managing land prices and ensuring equitable access to land resources will be critical for sustainable urban development. Finally, exploring innovative and cost-effective construction technologies can help reduce building costs, making affordable housing more achievable.

Abdikafi Hassan Abdi, Head of Research, ICE Institute