PROJECT PROPOSAL

FOR THE ESTABLISHMENT

OF REALESTATE & APARTMENTS
PROMOTER: Mr, MULUGETA SEMIE TEGEGNE
TEL.+251 918 340 772
Submitted to: Debre Markos City Administration

oct, 2021 Debre Markos, ETHIOPIA

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Mulugeta Semie Real estate, Debre Markos
 Table of Contents

EXECUTIVE SUMMARY ................................................................................................................................ 5

PART 1) O V E R V I E W OF THE PROJECT .................................................................................................7
1.1) BRIEF DESCRIPTION OF THE PROJECT ............................................................................................................................ 7
1.2) VISION....................................................................................................................................................................................................... 12
1.3) MISSION ................................................................................................................................................................................................... 12
1.4) OBJECTIVES & GOALS .............................................................................................................................................. 12
1.5) BENEFITS OF THE PROJECT DEVELOPMENT ..................................................................................................................13
1.6) KEYS TO SUCCESS ..................................................................................................................................................... 13
1.7) COMPANY OWNERSHIP............................................................................................................................................ 14
1.8) PROPOSED LOCATIONS............................................................................................................................................. 14
PART 2) E C O N O M I C OVERVIEW OF THE AREA.................................................................................. 16
2.1) GENERAL OVERVIEW ................................................................................................................................................ 16
2.2) OVER VIEW OF BAHIR DAR CITY ............................................................................................................................... 17
2.3) HOUSING SITUATION IN BAHIR DAR CITY ..................................................................................................................17
2.4) GROWTH OF THE CITY AND SOCIO-DEMOGRAPHIC TRENDS ....................................................................................21
PART 3) M A R K E T ANALYSIS & STRATEGY .......................................................................................... 23
3.1) MARKET TRENDS........................................................................................................................................................ 23
3.2) MARKET GROWTH .................................................................................................................................................... 23
3.3) MARKET NEEDS ......................................................................................................................................................... 24
3.4) MARKETING STRATEGY.............................................................................................................................................. 24
3.5) TARGET MARKET SEGMENT STRATEGY ......................................................................................................................26
3.6) COMPETITIVE COMPARISON ...................................................................................................................................... 27
3.7) SALES STRATEGY ....................................................................................................................................................... 27
3.8) SALES FORECAST ....................................................................................................................................................... 27
PART 4) M A N A G E M E N T SUMMARY ................................................................................................. 29
4.1) ORGANIZATIONAL STRUCTURE .................................................................................................................................. 29
4.2) PERSONNEL PLAN...................................................................................................................................................... 30
4.3) PRE-OPERATING ACTIVITIES AND EXPENSES ................................................................................................................31
PART 5) F I N A N C I A L PLAN ................................................................................................................ 32
5.1) PROJECT COST .......................................................................................................................................................... 32
5.2) SOURCE OF FINANCE................................................................................................................................................. 32
5.3) PROJECTED PROFIT AND LOSS ................................................................................................................................... 33
5.4) PROJECTED CASH FLOW ........................................................................................................................................... 33
5.5) PROJECTED BALANCE SHEET ...................................................................................................................................... 34
PART 6) A P P E N D I X ........................................................................................................................... 35

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 LIST OF TABLES

TABLE 1.1. PROPOSED ROOM PROGRAM OF THE PROJECT 8

TABLE 1.2. LAND USE PLAN OF THE PROJECT 8
TABLE 2.1. ADDITIONAL HOUSING UNIT REQUIREMENTS 18
TABLE 2.2. PATTERN OF POPULATION GROWTH FROM 1965 –2014 OF BAHIR DAR 22
TABLE 3.1. FIRST YEAR PROMOTION EXPENDITURE 26
TABLE 3.2. SALES ASSUMPTIONS 28
TABLE 3.3. SALES FORECAST 28
TABLE 4.1. PERSONNEL PLAN 30
TABLE 4.2. SUMMARY OF PRE-PRODUCTION CAPITAL EXPENDITURES 31
TABLE 5.1. INITIAL INVESTMENT BUDGET REQUIREMENT 32
TABLE 5.2. SOURCE OF FINANCE 33
TABLE 5.3. SUMMARY OF LOAN REPAYMENT SCHEDULE 33
TABLE 6.1. PROJECTED PROFIT AND LOSS STATEMENT (‘000) 36
TABLE 6.2. PROJECTED CASH FLOW STATEMENT (BIRR ‘000) 37
TABLE 6.3. PROJECTED BALANCE SHEET (BIRR ‘000) 38
TABLE 6.4. IRR CALCULATION (BIRR 000) 38
TABLE 6.5. PROJECT DEVELOPMENT PROGRAM 38
TABLE 6.6. CONSTRUCTION COST PROJECTION (BIRR) 38
TABLE 6.7. MACHINE & EQUIPMENT 39
TABLE 6.8. OFFICE FURNITURE & FIXTURES 39
TABLE 6.9. SUPPLIES EXPENSE PROJECTION 39
TABLE 6.10. MARKETING COST 40

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 List of Figures

FIGURE 1.1. DEVELOPMENT SITE PLAN 11

FIGURE 1.2. PROJECT LOCATION 15
FIGURE 4.1. ORGANIZATIONAL STRUCTURE 29
FIGURE 6.1. PRELIMINARY 3D DESIGNS 41

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 EXECUTIVE SUMMARY

The proposed project estimated to comprise 1000 residential building starting from G+0
villas, G+2 buildings and different sized apartments, constructed on 30 hectares of land
at Debre Markos city of the Amhara National Regional State.

The provision of housing and other services has not been able to keep pace with fast
population increase emanated from natural increase in cities as well as migration from rural
to urban. Greater needs for housing affected the increasing number of low & middle- income
households with little income to afford. Therefore, housing shortage since a long ago
became one of the critical urban problems in some cities of Ethiopia. The same is true for
Debre Markos, where housing is identified as one of the key development issues.

The proposed project will have:

1. G+2 and G+ 1 buildings constructed on 200-500 m2 compound area

Ground floor each 100 square meters
First floor each 1.00 square meters
Second floor each 75 square meters
Total floor area each 275 square meters
Plot area 200 square meters

2. Villa (G+0) on 500 m2 compound area

Ground floor 250.00 square meters
Plot area 500 square meters
For resettling existing residents

3. Common area & infrastructure

Community Park and children’s playground – a reasonable playground capable

of entertaining children, young and adult residents.

The project is proposed to be located in Debre Markos city.

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 The project is owned by Mr., Mulugeta Semie Real Estate P.L.C., established by the great
entrepreneur Mr., Mulugeta Semie who is keen to engage in an innovative and sustainable
real estate development as seen in his first real estate development work.

The market for high quality, reasonably priced real estate building units has been growing
significantly for the last decade in Debre Markos. Debre Marko's sales price and rental rates
have grown even more during this time. The supply of residential and commercial buildings
at the city has already increased sharply in recent years. At the same time, many unfinished
buildings are still in the pipeline, often delayed by shortages of key construction materials
or of financing. As supply expands significantly, there is expected to be a decline in the
current high rental rates (which largely reflected what a scarcity of commercial buildings
was until very recently).

Based on this study the total allocated and estimated cost of the new project
plant is 1 billion ETB with the initial investment cost of 500 million (50%) of it.
most of which, 74% is allocated for the working capital.

The projected profit and loss for the project is shown on the following table. We expect to
show a net profit at the end of the second year. This aggressive projection will help our
efforts to keep total cost of sales low while increasing gross margin. The project will raise
about Birr 20 million and pay tax of Birr 6 million annually in the projected 5 years of
construction completion.

The new project is expected to create an employment opportunity for 1240 individuals
during its construction period and after its successful accomplishment.

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 PROJECT PROFILE
Project name Mulugeta Semie real-estate project
Location Debre Markos
Required 30 hectares
area of the
project
Total 1 BILLION ETB
allocated
budget of the
project
Initial 50 percent of the total cost of the project.
allocated
budget
Entrepreneur The project is owned and established by Mr., Mulugeta Semie, the
profile great entrepreneur in the city of Bahir Dra and he is keen to engage
in an innovative and sustainable real estate development as seen
in his first real estate development work in Bahir Dar city.
Total houses 1000 different sized houses.
to be
constructed
Total 1240 individuals
Expected
jobs created

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PART 1) OVERVIEW OF THE PROJECT

1.1) Brief description of the project

The proposed project estimated to comprise 1000 different sized residential buildings
constructed on 30 hectares of land at Debere Markos city, in the Amhara National
Regional State.

The development is proposed by Mr., Mulugeta Semie Real Estate private limited company
established by local investor. In the proposed area with buildings designed to efficiently
utilize land resource as well as reduce cost to make it affordable for a wide range of the
society.

Now a days Debre Markos is experiencing unprecedented business and population growth
and a shift in lifestyle preferences of users, Debre Markos is a prime location to support an
integrated housing development. The city is also attracting more and more out-comer to live
and work in Debre Markos, meanwhile it is attracting natives or diaspora to live and work in
the city. There is high residential demand currently and there will be a huge housing demand
on long term in the city.

At this stage of the project study, which will be updated accordingly, it has the following
facilities:

➢ G+0 villa buildings

➢ G+1 building

➢ G+2 building

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My new project will also contain Community Park and children’s
playground, – a reasonable playground capable of entertaining children,
young and adult residents, community school, clinic, swimming pools,
public library, firefighting team and department, sport field, public park,
racing tracks, javelin throw fields, mini stadium etc
TABLE 1.1. Proposed room program of the project
No Unit Area (sq. Quantit Total Area (sq.
. Description m) y m)
1 G+1 building
Ground floor 100 4,801.34
First floor 100 4,801.34
Second floor 75 3,601.01
Subtotal G+2 275 13,204
2 G+0 building
Ground floor 250 500.01
Subtotal G+0 250 500
3 Others
Community Park & children's
playground 14,800 14,800.00
Basic infrastructure 6,521 6,521.10
Parking 2,734 2,733.88
Land escape 1,930 1,930.41

TABLE 1.2. Land use plan of the project

Physical Basic
No occupancy for infrastructure
. Description erected structures re Parking Landscaping Total
1 G+1 building 4,801 1,440 1,921 1,440 9,603
2 G+0 Villa 500 583 333 250 1,667
Subtotal 5,301 2,024 2,254 1,690 11,269
3 Others (G+2)
Community Park &
children's playground 3,600 480 480 240 4,800
Roads 20% 0 4,017 0 0 4,017
Total 8,901 6,521 2,734 1,930 20,087

The proposed residential uses would help meet the expected housing demand for Debre
Markos city as a whole, and the density of the proposed project allows for a substantial
number of affordable units to be included as part of the development program. The
residential component of the proposed project would include:
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The construction of the project will take about three years and it is expected to be
completed in four years of securing land.

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G+ 2 RESIDENTIAL BUILDING

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G+1 PROTOTYPE

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VILLA PROTOTYPE

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 1.2) Vision
The project promoters’ vision is to work in partnership with local communities that
can benefit all the involved stakeholders. With our effort, the development of affordable and
market-rate housing in these areas energizes the local economy, improves the community’s
quality of life and creates an atmosphere that supports the emotional and intellectual
development of its children. Through this work, the promoters aim to inspire confidence for
private market forces to then follow with further investment.

1.3) Mission
The projects mission is to join forces with communities to build stronger, more equitable for
Debre Markos area neighborhoods and other areas of the country.

1.4) Objectives & Goals

The proponent’s main development goal is to create a development that supports and
contributes to the unique character of the neighborhood to the maximum extent possible.

The goals of the proposed project are:

Quality public realm

Accessible and connected places and streets
A rich mix of uses
Centralized area of medium density mixed-use development
Improved housing diversity

Specific objectives include:

Create a thriving, financially viable, integrated real estate development

Provide affordable and market-rate housing units, retail and other commercial
uses, and neighborhood amenities
Knit the site into a vibrant neighborhood
Create new residential houses to address the needs of the community, including
affordable and market-rate housing
Promote a high- q u a l i t y built form that creates a distinctive urban form
and enables safety and security through passive surveillance
To create a high level of pedestrian amenity through the provision of continuous
streetscapes and interactive frontages

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 1.5) Benefits of the project Development
Residential real estate development supports the city’s land use and transportation
policies, and many local objectives, including:

Bringing together and integrating different land uses and activities, making them
readily accessible in one location
The creation of interesting and vibrant streets through the diversification of
activities
More efficient use of public infrastructure
Economic development through increased housing, employment, business and
investment choice and improved tax base;
Revitalization of downtowns, main streets, and neighborhood centers
Development of needed housing close to jobs and services; and the creation of
jobs close to where people live
Transportation choices and connectivity
Reduced distances between housing, workplaces, retail businesses, and other
destinations
Public cost savings (over sprawl development patterns).
More compact development
Stronger neighborhood character

1.6) Keys to Success

The key success factors for the project are:

1. Safe, quality building that provides state-of-the-art amenities at competitive prices.

2. Maintaining open communication between the management and its customers in
order to ensure the highest level of customer satisfaction and long-lasting reputation
within the community.
3. To continue to expand the number of units owned and maintained, while also
increasing the level of profits for its investors.

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 1.7) Company Ownership
The project is owned by Mr., Mulugeta Semie Real Estate P.L.C., established by Mulugeta
Semie who is keen to engage in an innovative and sustainable real estate development.

Most of the shareholders are residents of Debre Markos City engaged in various
businesses. They recognize the housing problems in the city and the souring prices of
private houses, which has become almost impossible to citizen’s ownership of residential
houses. Besides, the government’s effort in supplying houses, such as condominiums in
recent years, is well below the current and future housing demand of the city.

Therefore, it is their firm belief that unless the private sector, especially the local investors
shall involve widely to solve the housing problem. However, the obstacle for the local
investors is lack of capital and land, as real estate development requires huge investment.
Recognizing these factors, the project proponents are organized in a private limited
company to raise the required capital, which solves the shortage in capital.

1.8) Proposed Locations

The project is proposed to be located in Debre Markos city. The office will be established in
a quality office space in the downtown area of city, for the construction period.

The interior of the compound will have proper roads that provide access to the individual
building units. Overall, the site offers convenient access for future residents.

The total plot size of the project is 300,000 square meters; however, the project may require
additional land for next phase development, which is expected to be launched after
evaluating the initial project implementation.

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PART 2) ECONOMIC OVERVIEW OF THE AREA

2.1) General Overview

Housing is one of the necessities for human beings. However, it is a critical problem for
millions of poor people in developing countries, and Ethiopia is no exception. Ethiopia’s
urban centers are characterized by poorly developed economic base. Like most urban
centers of developing countries, most cities and towns in Ethiopia face a plethora of
problems, including an acute and ever-worsening housing shortage (Solomon & McLeod,
2004).

Urbanization being twentieth century demographic phenomena, more and more people are
changing residence from rural to urban areas. Studies have shown that increasing
proportion of the population prefer large cities, big towns and nearby administrative capitals.
The growth of an urban center can take place in different forms: by growth of the existing
urban localities, by classification of cities (from rural to urban) and annexations of new
territory to existing cities. The other main factor, which determines the growth of an urban
center, is the demographic change i.e., natural increase (difference between crude birth
rate and crude death rate) and migration effect. Some of the urban centers in Ethiopia have
already faced and others eventually will face one of these types of growth or a combination
of them.

This unprecedented urbanization unparalleled with the growth of the economy needs some
intervention to harmonize the difference. Be it through natural increase or migration effect
or area expansion, growth of an urban center definitely demands infrastructural
developments. This includes roads, schools, hospitals, health centers, housing, water
supply, sanitation, and waste disposal, light…etc. In Ethiopia, especially in urban areas,
shortage of housing is one of the major problems that call for immediate action.

The majorities of houses in Ethiopia are below qualitative standard and lack adequate
space. The extent of provision for water supply, electricity, and drainage is minimal. The
lives and health of people living in housing of such poor quality and with such inadequate
provision for water, sanitation, and drainage are under continuous threat. However, in the
developing world in general and in least developed countries like Ethiopia in particular the
number of people living in such conditions is increasing every year. Studies have shown
that without major improvements in housing markets and in the expansion and improved

Page | 15
provision of infrastructure and service, it is inevitable that the population living in such
environmental expand very rapidly.

2.2) Over view of Debre Markos city

Debre Markos city is a separate woreda, and an administrative seat of East Gojjam of the
Amhara region of Ethiopia. The city got its name after the principal church MARKOS, which
was constructed in 1869. 292 km distance North West of Addis Ababa. The city is
encompassed with flat landscape. the population of the city has increased by day to day.

2.3) Housing situation in Debre Markos city

The provision of housing and other services has not been able to keep pace with fast
population increase emanated from natural increase in cities as well as migration from rural
to urban. Greater needs for housing affected the increasing number of low -income
households with little income to afford. Therefore, housing shortage since a long ago
became one of the critical urban problems in some cities of Ethiopia. The same is true for
Debre Markos, where housing is identified as one of the key development issues (FUPI,
2006).

Existing housing unit and future demands: the 1984 population and housing census has
reported the availability of some about 9206 housing units (HU) and 10,291 households
(HH) in Debre Markos. The 1994 census result showed the number of Households (HH) as
20,857 and housing units (HU) as 19808. Assuming the same ratio would prevail until 2005,
the number of housing units is estimated to reach 35566 with corresponding number of
37344 households. Assuming the ratio would reach one to one ratio in 2015, number of
housing units (HU) would reach 61570 and the number of households (HH) which will be
accommodated in these housing units will be 61570. Based on this, to achieve the goal of
one-to-one ratio, 26004 housing units have to be constructed in ten

17
years of planning period (FUPI, 2006). Assuming equal numbers of housing units are
constructed in each year, at least 2600 housing units has to be constructed in each year.
The following table shows this.

TABLE 2.1. Additional housing unit requirements

Source: adapted from Integrated Development Plan of 2006(FUPI, 2006)

Housing condition: The housing Condition of neighborhoods in the central parts of the
city shows there are low standard houses with most of the houses being kebele owned. It
has also been observed that most of the housing units in the central parts of the city have
no or with sub -standard related services/facilities.

Squatter settlement: The squatter settlements in the city are growing in every side of the
periphery especially around the lakeshore. The number of squatter housing units in the year
2000 was 4823 units. Moreover, it was 3504 units in 1994, which shows an increase of
38%. The study in this regard reveals the availability of more than 5000 squatter settlements
in the city in 2006.This shows there is a mismatch between demand and supply (FUPI,
2006).

Slum and overcrowding: Like Addis Ababa, the central core area of Debre Markos is also
characterized by the existence of slums. The slum areas in the central the livelihoods of the
residents are based on informal trading like selling local drinks. The City Administration
plans is to design a detail spatial, social, economic and environmental development options
in the kebeles.

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Formal housing supply and institutional set up the formal housing supply found in the
city can be categorized as public sector, market sector, people sector and community sector
housing delivery systems.

Public sector housing: This is housing supply system where government directly involved
in the supply of housing for low and middle-income residents of the city. It includes kebele
houses, rental houses and condominium houses. The governmental institutions directly
involved in the supply of these houses are Construction and Housing Development Agency
(Condominium housing), ANRS Housing Development Agency previously, which was called
Rental Housing Administration and the City service.

Condominium housing in Debre Markos as part of the Ethiopian Integrated Housing

Development Program, Integrated Housing Development started constructing of
condominium houses in 2007. The main responsible organ for the housing development is
the City Administration Housing Development Agency. The program assumes the main
targets of the housing development to be low and middle-income residents of the city. The
total houses transferred to beneficiaries whose construction started in 2007. The agency
now transferring housing units started construction in 2008 and finished in 2011.Out of this
governmental organizations, like university, have taken 1127 housing units. The remaining
966 housing units are transferred to selected civil servants, institutions, federal defense
members, kebele dwellers and housing cooperatives. The numbers of housing cooperatives
left under municipality waiting list for land allocation and did not get land due to the
termination of land allocation. the City Administration Housing Development Agency gives
opportunity to take condominium blocks for housing cooperatives. As Officer at planning
preparation said, monitoring and evaluation department, said, the agency distributes a
paper to know the housing demand of the city dwellers in

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the year 2011.

Market sector housing: After free market economy started, few private sector developers
are engaged in housing development in the city through real estate development. This part
was assumed for high-income residents of the city.

Community sector housing: These associations and cooperatives solve their housing
problem in partnership with the government, NGOs and other international governmental
organizations. The following are NGOs and international cooperative organization
participate on housing delivery in Debre Markos.

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The regulatory framework has not been rigid. The city administration and the NGO have to bridge
their gap to solve the housing problem of the poor.

The existing challenges of the existing housing developers are:

Has addressed mainly the needs of the diaspora and the top about “5 – 10 %” of
the society
Characterized by high prices far beyond the capacities of Ethiopians
Mainly limited to Addis Ababa
Some of them have quality issues

TABLE 2.2. Pattern of Population Growth from 1965 –2014 of Debre Markos
Year Growth rate/population
1965
1975 12%
1984 11%
1994 8%
2002 6%
2007 2%
2014 15%
Source: compiled from CSA census reports and annual statistical abstracts

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 PART 3) MARKET ANALYSIS & STRATEGY

3.1) Market Trends

This industry is constantly evolving and leaving many inflexible companies stagnant. One
of the major trends is the need to adapt to technological advancements as well as
maintaining the overall appearance and condition of the complexes.

Another important trend is adapting to higher density housing in smaller areas due to urban
growth boundaries, etc. we are dedicated to following these trends while maintaining the
level of comfortable livability that sets us apart from our competitors.

The supply of residential and commercial buildings at the city has already increased sharply
in recent years. At the same time, many unfinished commercial buildings are still in the
pipeline, often delayed by shortages of key construction materials or of financing. As supply
expands significantly, there is expected to be a decline in the current high rental rates (which
largely reflected what a scarcity of commercial buildings was until very recently). For
commercial space in city center locations, we think property owners can manage to keep
rents high given the unique demand for such locations.

In line with the expectation of vertical expansion, the spread of apartment residential homes
is in our view bound to become much more widespread in the coming years. The early
initiative in this regard has already been taken by the government ‘s large-scale
condominium projects but we see much more active private sector involvement as well from
here on. Private apartment developments are expected to be much more diverse in their
targeted market segment than those of the government are which are likely to continue their
original objective of addressing the housing needs of mainly lower income. That is, we see
private developments targeting a market segment that starts with middle- income
households but also caters to buyers seeking very high-end, exclusive, and luxurious
apartment residences.

3.2) Market Growth

The market for high quality, reasonably priced real estate apartments building units has
been growing significantly for the last decade in Debre Markos. Sales price and rental rates
have grown even more during this time.

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The Debre Markos market is experiencing rapid employment growth that is fueling demand
for apartments, but not many new units are emerging. Not only is this project pioneering this
particular niche of quality mixed commercial, retail and residential units, but also it is
capitalizing on the strength of the current economic growth in the country.

As capital of the Amhara National Regional State and economic hub for the region, the
demand for high-end residences in close to city center locations is unlikely to face any
shortfall in demand. If anything, as Debre Marko’s business community expands to include
the representatives of foreign companies and investors, there might even be continued
upward pressures on rents in the coming years to the extent that there is no significant
expansion in the supply of city center homes. Thus, we see few risks for declines in sale
prices or rental rates for retail, commercial and residential houses.

3.3) Market Needs

Each of our targets needs the quality, convenience, service, safety, comfort and
technological amenities that can only be found at our living complexes.

Compact and high to mid-rise apartment building expansion will be promoted from a policy
perspective by a City Administration as part of its upgrading and revitalizing of under-
developed city locations. From a business perspective, developers will be eager to exploit
the considerable cost savings (per square meter space of land area) offered by vertical
expansion. With both policy and business interests lining up towards such type of
development, an expedited pace of such developments can be expected in the coming
years.

3.4) Marketing Strategy

Marketing in a highly competitive housing industry depends on the recognition of
excellence, as well as a point of difference to display our units in an individualized light. The
project will build a reputation upon these components.

We will develop and provide a working and living environment of unmatched proportion. It
starts with the commitment to customer satisfaction and fulfilling their demands. Our
commitment to quality and comfort includes safety and 24-hour customer service. The
aspect of our living developments that differentiate this project from all other apartment
development companies is its focus on maintaining the most advanced technological
innovations on the market for our tenants.

23
 3.4.1) Distribution Strategy

We will focus on providing high quality shopping, working and living in convenient location
with a wide customer base. It is also important that we remain at the upper echelon in the
quality range when compared to competitors. We can only do this by organizing and
implementing a sound plan that will assume responsibility for the functionality and
appearance of our properties. We will create an updated Web site for anyone interested in
the properties.

3.4.2) Marketing Programs

Our most important marketing program is customer word of mouth. The only way to truly
know the quality of our units is through experience; hence, we must maintain the highest
level of customer satisfaction. Rewards will be given to clients or customers that refer new
clientele to the company. We confidently believe that the high level of quality that we will
provide can attract a strong demand for our units.

Another incentive that we will use is the early move-in bonus program. Anyone that signs
their lease before some defined time will receive a free month as well as reserved parking
space. This will encourage people to try and beat the rush of people who move in later. It
will also give the appearance of increased demand.

3.4.3) Positioning Statement

For people who desire high quality working and living with all the technological amenities
available, only our properties will be able to fulfill their needs and desires at an affordable
price. Unlike most other property management companies, we are committed to
guaranteeing customers full satisfaction, with 24-hour on-staff service, live answering
service, and a website that handles all complaints instantly.

3.4.4) Pricing Strategy

We are competing with many small firms who have similar complexes. Our prices will be
competitive with these firms while maintaining the high level of quality and expert
management.

24
We, however, must try to follow market-pricing trends in order to maintain a competitive
advantage.

3.4.5) Promotion Strategy

Our most successful promotion will come in the form of word of mouth. Since we will own
apartments and real estate, we will be highly visible to the public. Since our complexes will
be in the upper echelon of quality and livability, word will spread through the community
about our unique appeal.

Along with word of mouth, our most consistent form of promotion will come from ads in local
publications, as well as smaller magazines and circulations. We will also be personally
promoting our building units within the community.

TABLE 3.1. First year promotion expenditure

S.NO Promotional Activities Amount (Birr)
1 Radio 84,699
2 Television 72,000
3 Bill board/wall branding 25,000
4 News paper 15,000
5 Sponsoring 30,000
6 Participate in local tradeshows (exhibition) 37,500
7 Business card 1,500
8 Brochure 5,000
Total 270,699

3.5) Target Market Segment Strategy

The project’s main consumer base will be primarily medium businesses, professionals and
middle-income residents of Debre Markos who will benefit from the building's unparalleled
level of quality and technological amenities. We will also be marketing to local area
professionals and consultants as well as small retailers. These customers will be looking
for safe, high-quality environments that can foster the type of atmosphere needed for
business and professional success.

The project will focus on the three previously mentioned market segments: medium
businesses, local area professionals and middle-income residents.

Our target customer is usually looking for convenient living facilities that foster a safe,
enjoyable, and appropriate environment. They are technology savvy and have a desire to
have access to the technological amenities that we provide.

25
 3.6) Competitive Comparison
The project will face competition from the booming building construction in the city of Bahir
Dar. However, the project's competitive advantage is as follows:

1. We offer a more integrated commercial, retail and residential units in one location,
which in almost all competitors are not available
2. Our marketing and advertising costs will be high, in addition to implementing simple
marketing strategies.
3. The main competition the project will encounter will be average lower cost
apartment units.

Very few apartment units offer the same level of quality and technological amenities as our
proposed properties. We also have a very high regard for customer service; something that
is unparalleled in this industry. We believe it is essential that the customer feel he/she is
being treated with the utmost care and urgency. All staff and personnel go through a training
program that teaches many of the skills needed for successful client relations and customer
service.

3.7) Sales Strategy

A sale in our business is based upon providing customers with a living concept fitting of
their needs. We must be in touch with the needs and desires of our clientele in order to best
attract a consistent flow of incoming residents.

We will have brochures available at our offices. These will give the customer a general
outline of our units and will explain the benefits of our units. We will also have annual
newsletter that we will send out to our clients. This newsletter will inform the clients as to
the growth and outreach of our building. It will also contain some human-interest stories
about our complexes and the residents.

Our marketing strategies will be simple but aim to reach a large amount of people. The
layout of our advertisements will have a sophisticated and contemporary look without being
overly formatted.

3.8) Sales Forecast

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The following table and chart give the forecasted earnings for our housing units. We perceive
that the company will complete and handover to customers at the end of the third year

The customers are expected to pay a 10% down payment (advance payment) and continue
paying a monthly installment to reach 50% before the construction is completed. The
company will work with financial institutions for the remaining 50% of the payment for those
customers not able to pay once.

TABLE 3.2. Sales assumptions

Net Square Meter Sales price

No. Unit Type # Of Units Average Total Birr / Unit Total Birr
1 G+0 Residential villas
Ground floor 48 100 4,801
First floor 48 100 4,801
Second floor 48 75 3,601
Total building floor 48 275 13,204 4,043,632 234,471,613
Total plot area 48 200 9,600
2 G+1 Residential building 2 250 500 3,437,569 7,218,894
Total plot area 2 500 1,000
TOTAL 241,690,508

TABLE 3.3. Sales Forecast

N Description Year Year 2 Year 3 Year 4 Year 5 Total
o. 1
1 G+2 VILLA 0 88,959,90 73,391,91 48,438,66 23,681,126 234,471,6
2 9 7 14
2 G+0 VILLA 0 3,437,569 3,781,326 0 0 7,218,895
G+1 0 3,437,569 3,437,569
3,781,326 3,437,569
3,781,3260 3,781,326
3,437,569
03,437,569
0 3,781,326
7,218,895
0 7,218,895
3,781,326
00 7
3

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 PART 4) MANAGEMENT SUMMARY

4.1) Organizational Structure

The project depends on an organized division of responsibilities in order to run an efficient,
diversified enterprise. Main decisions and responsibilities will be rested on the general
assembly of Mulegeta Semie Real Estate plc. will focus on maintaining high quality and a
cohesive business entity. Top managers will be hired and given specific responsibilities
such as marketing, finance, strategic management, or research and development.

There will be three main departments, which are Technical Department, Administration &
Finance Department and Marketing & Sales Department. The company will make all
decisions in accordance with the company mission. Employees are delegated tasks based
upon their specialty.

Every six months, the general assembly will assess the results of these tasks, and the
personality of the employee involved, to determine promotion and/or salary issues.

GENERAL
MANAGER

TECHNICAL ADMINISTRATION MARKET & SALES

DEPARTMENT & FINANCE DEPARTMENT
DEPARTMENT

Figure 4.1. Organizational structure

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 4.2) Personnel Plan
This expansion project requires 240 permanent and temporary employees during
construction and operation. The following table summarizes our personnel requirements
and salaries, with benefits of 20% and salary increase of 5% every year. We believe this
plan is a compromise between fairness and expedience and meets the commitment of our
mission statement.

TABLE 4.1. Personnel Plan

MONTHLY ANNUAL
NO. POSITION Quantity SALARY TOTAL TOTAL
A MANAGING DIRECTOR OFFICE
1 General Manager 1 30,000 30,000 360000
2 Executive Secretary 1 5,000 5,000 60000
Subtotal 2 35,000 35,000 420,000
B TECHNICAL (DESIGN & SUPERVISION)
1 Design, Supervisor & Housing Tech Director 1 20,000 20,000 240,000
2 Architect 1 5,800 5,800 69,600
3 Electrical Engineer 1 4,900 4,900 58,800
4 Draft Person 1 5,500 5,500 66,000
5 Junior Engineer I 1 6,000 6,000 72,000
6 Junior Site Supervisor 1 3,900 3,900 46,800
7 Sanitary Engineer 1 4,800 4,800 57,600
8 Site Coordinator 1 7,000 7,000 84,000
9 Contract Administration & Customer division Head 1 20,000 20,000 240,000
10 Contract administrator 1 6,000 6,000 72,000
Subtotal 10 83,900 83,900 1,006,800
C ADMINISTRATION AND FINANCE
1 Finance & Administration Manager 1 15,000 15,000 180,000
2 HR & Administration Manager 1 15,000 15,000 180,000
3 Accenting &collection 1 6,500 6,500 78,000
4 Supply & Procurement manager 1 8,200 8,200 98,400
5 Casher 1 3,200 3,200 38,400
6 Attorney 1 3,400 3,400 40,800
7 Cleaner /Messenger 1 1,600 1,600 19,200
8 Public Relations Manager 1 8,600 8,600 103,200
9 Storekeeper 1 2,500 2,500 30,000
10 J. Personnel officer 1 4,600 4,600 55,200
11 Receptionist 1 2,900 2,900 34,800
12 Cleaner /Messenger 1 1,600 1,600 19,200
13 Accountant I 1 4,000 4,000 48,000
14 Accountant 1 6,500 6,500 78,000
15 General Service officer 1 5,800 5,800 69,600
16 Purchaser 1 2,500 2,500 30,000
17 Driver 1 3,000 3,000 36,000
18 Receptionist 1 2,000 2,000 24,000

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 MONTHLY ANNUAL
NO. POSITION Quantity SALARY TOTAL TOTAL
Subtotal 18 96,900 96,900 1,162,800
D MARKETING
1 Marketing Manager 1 20,000 20,000 240,000
2 Market Research & Promotion Officer 1 10,200 10,200 122,400
3 Sales Officer 1 3,000 3,000 36,000
4 Public Relations Expert 1 3,700 3,700 44,400
5 Cleaner /Messenger 1 1,700 1,700 20,400
Subtotal 4 18,600 18,600 223,200
240 234,400 234,400 2,812,800

During construction, the company will employ more than 240 people. Labor requirement
for the construction is estimated based on the following assumptions:

Total building floor area 5,301

No. of working shifts 1
Working hours per shift 8
Total working hours 8
Total man‐days required 42,411
Average manpower required 59
Peak (*1.95) 115
Steel fixer + helpers (32 %) 37
carpenters + helpers = 30 % 11
Masons + helper (38 %) 44
Total 240

4.3) Pre‐operating activities and expenses

The project will incur certain expenditures prior to the start of construction, which are due
in the various stages of project formulation and implementation.

There will be also other government payments related to business registering legal
licensing and pre-operation financial expenses.

TABLE 4.2. Summary of pre-production capital expenditures

No. category Total cost
1 Pre‐investment studies 600,000
2 Preparatory investigations 65,000
3 Professional fees engineering, legal & accounting 150,000
4 Build‐up of administration recruitment and training of staff and labor 30,000
5 Licensing & other legal fees 15,000
Total 860,000

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 PART 5) FINANCIAL PLAN

5.1) Project cost

Development cost is one of the key elements in calculating profitability, return on
investments, etc. of the project. Therefore, it is important to determine the possible costs of
constructions, planning, architectural works and other related works as accurate as
possible.

Due to the nature of the business, as all houses are proposed for sales, the company has
an investment on building & civil works. Based on the study the total development cost of
the project is estimated around Birr 1 billion, most of which, 74% is allocated for the working
capital. We have budgeted initial investment for first phase of the project is up to 50 percent
of the total allocated budjet.

TABLE 5.1. Initial investment budget requirement

No. Investment category Amount (Birr)
A Fixed investment costs
1 Land lease 320,000,000
2 Civil works 30,960,000
3 Equipment & Machines 11,035,150
4 Furniture 30,178,733
5 Vehicles 10,400,000
6 Other miscellaneous assets 121,388
Sub total 473,302,210
B Working capital need 24,661,416
C Pre‐operating expense 2,036,374.00
Total 500,000,000

5.2) Source of finance

The financial need for the project is expected to be gained from buyer’s equity, customer’s
advance & regular payment as well as long-term loans from financial institutions. The loan
is required for working capital and paid in 10 years. The loan amount is 50% of the fixed
investment and working capital.

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 5.3) Projected Profit and Loss
The projected profit and loss for the project we expect a net profit at the end of the second
year. This aggressive projection will help our efforts to keep total cost of sales low while
increasing gross margin. The project is expected to raise about Birr 20 million and pay tax
of Birr 6 million annually in the projected 5 years of construction completion. The planned
projections are included in the attached Profit and Loss table.

5.4) Projected Cash Flow

We expect to manage cash flow over the next 4 years with an initial equity investment, a
bank loan from a one of the financial institutions

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Figure 6.1. Preliminary 3D Designs

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