Spatial Variability of Urban Land Price in Addis Ababa, Ethiopia

Abstract

Land value results from the site's desirability and economic value, as well as the availability of essential facilities. Understanding the spatial variation and determinants of prevailing land prices is crucial for urban planners and policymakers, given that land value, infrastructure availability, and proximity to public services are interrelated. To this end, we used 938 datasets of land lease prices per square meter from an online source. Additionally, geographic coordinates for each neighborhood association, the lowest level of city administration (Woredas), were collected from Google Earth. The data was analyzed using both statistical and geostatistical methods. The results of the Hedonic Pricing Model (HPM) indicate that plot area, land zone, land grade, building height, lease benchmark price, advance payment, and distance from the city center significantly influence the land prices. On the other hand, the spatial autocorrelation analysis revealed clusters of similar lease prices across various geographic areas of the city. High lease prices were concentrated in the city center, while the clusters of low land prices were randomly distributed at the periphery. The insights from this study contribute to the capture of land value resulting from public actions. Besides, the findings have practical implications for urban planners in making site-selection decisions for urban development projects and in fostering equitable and sustainable infrastructure provision. Moreover, real estate buyers, developers, and appraisers have different interests in land marketing. Thus, the study's findings are also crucial for understanding potential hot and cold areas of land value, as well as the driving factors of land value variability across the city.