January 29, 2023
January 29, 2023
Mogadishu is the most populous city in Somalia and, in 2015, ranked second as the fastest-growing city in the world by population after the Indonesian city of Batam. In the 1940s, Mogadishu had a population of around 40,00 people. Following independence in 1960, the city witnessed the growth of informal settlements and swift urbanization, growing 10% per year in the 1960s. Shortly before the collapse of the military regime in the late 1980s, the city’s population was estimated at one million. However, with the subsequent civil war and recurring massive displacements between 1991 and 2011, the population of Mogadishu fluctuated. With Al-Shabaab leaving the city in late 2011, many Somalis began moving back to Mogadishu, including some from overseas.
With old and new residents moving back to Mogadishu after the relative peace, it is obvious that not everyone does have land or a house in the city and cannot afford to buy one. This leaves them no choice but to rent residences and become tenants. Moreover, due to the weak economy of the country, unpredictable and expensive land prices in Mogadishu, and the low income of the society, it is not easy for many families to own houses or become permanent residents. Consequently, they are compelled to remain tenants for a long time. However, being a renter is also becoming difficult to bear because of the current skyrocketing rent prices in Mogadishu.
It is against this background that Somali Public Agenda (SPA) held a forum on October 13, 2022, to understand the forces underlying the steep increase in house rent prices, their impact on the poor and low-income people in Mogadishu, and possible policy considerations on this important issue. Many participants attended the discussion including lawyers, real estate workers/owners, tenants, public notary workers, researchers, real estate brokers, and members of local youth associations. Furthermore, representatives from the FGS Ministry of Public Works and Housing and the Mogadishu Municipality were present at the forum.
Causes of the Rise in House Rents
Many factors cause the high rent rates in Mogadishu. These include insecurity in some parts of the city, relative security in other parts, and the increasing population and rapid urbanization of Mogadishu.
(In)security: Although the al-Shabaab was driven out from Mogadishu in late 2011, the overall security picture of the city is still unstable, and it is considered the most insecure area in Somalia. However, the security conditions in the city differ from one neighborhood to another. The periphery, semi-periphery and highly protected zones offer different security, which affects the land value and the rate of house rents. Consequently, for many people, including civil servants, government officials, some diasporas, foreigners, and business people, residing in the peripheral districts is not an option at all. They often remain in the relatively secure districts in the center of the city, where rental prices are staggeringly high. Furthermore, foreign embassies and governmental and international organizations concentrate on the safe and protected government-populated zones of the city.
According to a land broker, Wadajir, Hodan, and Waberi are among the most expensive districts to live and rent a house in Mogadishu. Most of the government offices are located in these districts and other core districts such as Warta-Nabadda (previously War-Dhigley), Hamar Weyne, and Abdi-Aziz. In addition, when people get jobs from governmental and non-governmental organizations, they often relocate to these central districts for security reasons. As a result, landlords exploit this vulnerability and high demand by increasing rent prices as more people turn to them daily.
Increased Demand: The high demand for rental houses is believed to be another major factor that causes the soaring rents in Mogadishu. The city is the most populous in the country, with an estimated more than 2 million people. The number of people, mostly youth, moving from other regions in Somalia and looking for tertiary education and employment opportunities in the capital city has increased significantly over the past decade.
Furthermore, the situation has been aggravated by a wealthy diaspora who began purchasing residential and business plots and renting houses in the most secure neighborhoods with a high price after relatively security has improved and the government regained full control of the city in late 2011. Subsequently, the high demand due to the increasing population of the city combined with the investors’ intention to make quick returns from their investments culminates in prohibitive rental prices.
On the other hand, a participant at the SPA forum argued that most of the diaspora are not cost-conscious and have a good income compared to the locals. Accordingly, they mostly accept the higher prices that the landlords demand. That price becomes standardized and is increased continuously without considering the low-income and poor local people who can hardly afford these rates.
Rapid Urbanization: Following Mogadishu’s relative peace and the establishment of the first non-transitional government in 2012, development initiatives and reconstruction efforts began. Three years later, in 2015, Mogadishu was ranked the second fastest-growing city in the world by the US-based consultancy Demographia (after Batam, Indonesia). Real estate is one of the booming sectors in Mogadishu, where banks and businesspeople are heavily investing. Daru Salaam gated community in Yaqshid district is a prime example. The initial phase of the construction cost was estimated at US$20 million, consisting of 500 houses and 50 dwellings upon completion.
However, rental costs and house prices have hardly witnessed a slowdown despite the growing investments in the real estate sector. Conversely, the rent prices are continuously going up as new flats and apartments are built, and landlords are setting the bar higher as they introduce new projects.
Apart from the core causes of the increasing rent prices in Mogadishu, land commodification and real estate financing are contributing to the costs of rent in Mogadishu.
Land Commodification: Commercial and residential lands are highly commodified in Mogadishu. This has led to an unprecedented rise in land and rental prices that don’t reflect a corresponding improvement in the economic situation of the country and people. Various contributors are believed to be behind this commercialization including land speculation, diaspora investment in land and construction, and other commercial interests.
Moreover, different actors involved in land-related decision-making, economic transactions, and conflict adjudication add more costs to land and its construction since all these governmental and non-governmental actors receive money in the process in different ways, such as fees, bribes, and taxes. These costs are passed on to tenants, also contributing to spiraling rental prices.
Real Estate Financing: With the Central Bank of Somalia gradually starting its functions and regulations for banking, the financial sector is increasingly adopting a more formal style of operation. The banking sector is in an early stage, with only a few commercial banks registered so far by the Central Bank of Somalia. Real estate financing is one of the main financial products that these banks currently offer.
Nonetheless, a local engineer who works in the real estate sector and was interviewed for this commentary argued that the Muraabaxa (cost-plus financing) finance solution partially causes the rising rents in Mogadishu. He argued that landlords, who obtain bank financing to build their houses, push tenants hard by charging them very expensive house rents, with some also demanding tenants to pay several months’ rent in advance. By doing this, he asserted, landlords might repay the bank’s money faster and make a quick profit at the same time.
Consequences of the High House Rent Prices
The consequences of the high rent prices in Mogadishu are often felt by the displaced communities and the urban poor. Gentrification forced evictions and insecurity in some neighborhoods are – in part – consequences of high house rent prices in Mogadishu.
Gentrification: Due to the unaffordable and ever-increasing rent prices in Mogadishu, some urban poor and internally displaced people (IDPs) move to peripheral areas voluntarily to get cheaper house rents or places to squat. As will be explained further in the following paragraphs, most of these areas are more dangerous than the core districts from which people are being pushed out.
Because of the poor development and scarcity of job opportunities in the periphery, they are forced to come into the city center on daily basis to make a living and return at sunset. Additionally, the Mogadishu-Afgoi Road, which is the main road that peripheral residents use, is known to be unsafe, with landmines and explosions occurring frequently. The most recent occurred in October last year when a landmine struck a civilian public transportation minibus traveling on the road, killing eight passengers.
Forced Evictions: Over the last decade, there has been an increase in the number of mass evictions in Mogadishu, mostly of IDPs, due to rising land and property values and an increasing number of developers and potential real estate and commercial sites. In 2017 alone, an estimated 148,000 people were evicted. Many of those people were pushed out to peripheral districts, including Daynile and Kaxda. When evicted, they did not only lose their homes and shelter but also their food stock and livelihood assets.
In addition, in some cases, IDPs are used as an instrument to manipulate urban land values and real estate prices and then evicted afterward to new settlements, where the same scenario repeats itself. IDPs also play a role in clearing previously unused land for their camps and connecting them to local infrastructure. This adds value to these plots at which point landowners may return to evict residents for further commercial development of these areas. It should be noted that rising rental prices are one of the factors driving up land values in the Benadir region. Consequently, landlords evict IDPs and urban poor people so that their lands are developed or rented.
Security Concerns: The misery and suffering of the evicted and gentrified urban poor and IDPs do not stop there. As they reconcile to life in their new settlements in the outlying districts, they face new challenges. The peripheral areas are known to be unsafe, and the government provides limited security services there. Extortion, illegal roadblocks, robbery, and organized crime occur in these periphery areas.
Furthermore, the notorious Ciyaal Weero gangs have a profound presence in these areas and commit violent crimes including murder, robbery, and assault. On the other hand, a resident in a peripheral area, who could not move to the city center due to the extreme rent prices, pointed out that he leaves early in the evening from downtown for security reasons and goes home. He further added that it is difficult for him to attend late-evening events or enroll in classes in the city center for the same reasons.
Firstly, the government needs to improve the overall security of Mogadishu. The situation has forced many people to congregate in a few areas of the city while the rest are uninhabited or have fewer residents. Most of the civil servants and international organizations workers reside in the central areas of the city due to the fragile security situation in the city. Consequently, house rents and the cost of living in the core districts of Mogadishu are spiraling upward. Improving the security of the entire city would ease the over-concentration in some parts of the city and could contribute to a decline in the high rent prices in Mogadishu.
Secondly, the government should introduce new laws and policies to control and regulate the real estate sector and prevent rent manipulation. The policies should, for example, set a limit where rent prices cannot be exceeded with due regard to the economic situation of the country; how much a landlord can charge for a security deposit on new leases; and how much a landlord can increase rent; and introduce mechanisms that enable both tenants and landlords to have fairer contractual agreements. In the current lease “agreements”, landlords mercilessly dictate the terms of the “agreements”, which leaves no room for maneuvering for the tenants. Moreover, local courts find it difficult to hear such cases since the few current laws that exist regarding this matter (and that the courts rely on for deliberations and jurisdiction if a particular party breaks the lease “agreement”) are outdated. The issue urgently needs updated legislation and policymaking. On the other hand, apartments are growing rapidly in Mogadishu due to the heavy investments in the real estate sector. However, this newly emerging sector has no laws in place that explain ownership rights or other related laws. Nonetheless, the Benadir Regional Administration (BRA) has recently appointed the “Apartments Director,” but the role of the new department remains ambiguous.
Thirdly, health, education, and other social services should be decentralized, and their effectiveness needs to be improved. Furthermore, jobs and employment opportunities should be distributed, and investors should not only consider Mogadishu for their investments. Many people who relocate from other regions to Mogadishu are simply looking for tertiary education and social services that are unavailable or insufficient in their home regions, while others are looking for employment opportunities because Mogadishu receives significantly more investment than other cities in the country. The government should also encourage the Somali diaspora and other foreign investors to invest in other regions to create jobs and employment opportunities there.
Fourthly, there should be policies in place to prevent forced eviction and support people affected by gentrification to resettle. Although Mogadishu is rapidly developing, rapid urbanization is hurting the city’s urban poor and IDPs. It is estimated that more than 40% of IDPs in Somalia live in Mogadishu. The government should not leave these vulnerable communities at the mercy of the wealthy and business people, who have been massively investing in real estate in recent years
This commentary and the forum were supported by International Media Support (IMS).
Mohamed Adam is forums coordinator and researcher at Somali Public Agenda.