PREMIUM COLLEGE

SCHOOL OF GRADUATE STUDIES

Project Planning and Management Program

Project Proposal

Research Topic
A Case Study of Real Property Valuation for Expropriation
Purpose in Addis Ababa City

Solomon Nega
PC-GR/162/12

Section-01
solomonnega53@gmail.com

Advisor Ass. Prof. Amanuel

Date June 6, 2021
Addis Ababa
 Case Study of Real Property Valuation for Expropriation Purpose in Addis Ababa City |
Solomon Nega

Table of Contents
Chapter One: Introduction.......................................................................................................1
1.1. Background of the Study.......................................................................................................1
1.2. Statement of the Problem.....................................................................................................2
1.3. Significance of the study........................................................................................................4
1.4. Objectives of the Study..........................................................................................................4
Chapter Two: Literature Review..............................................................................................5
2.1. Real Property Valuation.........................................................................................................5
2.1.1. Bases of Property Valuation........................................................................................................................7
2.1.2. Real Property Valuation Approaches..........................................................................................................8

2.2. Expropriation............................................................................................................................10
2.2.1. Theoretical Foundations of Expropriation................................................................................................10
2.2.2. Current practices and concepts of Expropriation.....................................................................................11

Chapter Three: Materials and Methods.................................................................................13

3.1. Methods of Data Collection.......................................................................................................13
3.2. Methods of Data Analysis..........................................................................................................13
Work Plan.............................................................................................................................14
Bibliography..........................................................................................................................14

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Acronyms and Abbreviations

A R
ADB RICS
Asian Development Bank........................1 Royal Institute of Chartered Surveyors. . .4
I T
IVSC TEGoVA
International Valuation Standards Council The European Group of Valuers'
.............................................................2 Associations.........................................2

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Chapter One: Introduction

1.1. Background of the Study

Expropriation is an important tool in most countries for land acquisition for public purposes
although it can often be arranged through other means. For instance, expropriation can be
exercised through voluntary agreements (Viitanen & Kakulu, 2007). Driven by the demand for
economic development and improvement of the well-being of citizens, governments in every
country maintain and exercise the power to expropriate private properties for public purposes.
And every sovereign state maintains an “eminent domain power” to advance the interest of the
public (ADB, 2007). Most countries have developed land expropriation laws to restrict their
government’s exercise of eminent domain power and have accumulated experience in
implementing those laws. Such laws typically: (i) define the cases in which the government can
exercise its power; (ii) describe the rights and participation of those persons whose assets are
being taken; (iii) define the lost assets for which compensation is payable; and (iv) define the
level of compensation that is payable for those assets.
Although both private and public development projects ultimately aim to improve people’s well-
being, such projects may result in direct negative impact on some portion of the population.
Perhaps, chief among those negatively impacted are those whose assets are taken by the
authorities as part of the project. This typically happens because the project requires land. As
such, those people living on, working on, or otherwise benefiting from the land and its related
resources often become losers. Any development project is essentially an endeavor to bring
overall economic benefits to the people in the country, including those who have to be displaced
or lost their asset by the project. These affected people –whether they are titled holders or
informal dwellers of the property to be expropriated –are an integral part of beneficiaries, rather
than sufferers, of such development project. Any impoverishment to affected peoples by such
project will be inevitably translated into not only a failure to achieve the project’s goal of
increasing overall well-being for all citizens, but also an impediment to the smooth execution of
the project. The risks of impoverishment of losers and displaced people can be mitigated.
Compensation for expropriated assets and injuries and rehabilitation measures to help improve
or, at least, restore incomes and standard of living are among measures taken by the expropriator.
Unlike developed countries where private ownership is the main form of land ownership,
Ethiopia adopted public ownership of land. As the Constitution of the Federal democratic
republic of Ethiopia, article 40(8), land is a common property of the Nations, Nationalities and
Peoples of Ethiopia and shall not be subject to sale or other means of exchange. However, such
public ownership of land has undergone a series of reforms since the start of the current
government when it started to move toward a market economy, resulting in a separation of land
use rights from land ownership where land is still publicly owned while use rights to such land
are allocated private individuals. Since land is publicly owned, expropriation of land only
involves ‘withdrawal’ of land use rights. The government of Ethiopia may withdraw land use

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rights from the right holder: (i) public interests, (ii) expiration of land use terms without renewal
or denial of the renewal application, (iii) dissolution or relocation of the holder of
administratively allocated land rights. However, a landholder is entitled to payment of
compensation for his property situated on the land and for permanent improvements made on the
land (Proc. No 455/ 2005 Article 7 (1) and later revised on Proc. No 1161/2019 Article 11).
In Ethiopia, property valuation is carried out for payment of compensation for both rural and
urban development activities; private and government development projects (dam construction
for drinking water and irrigation purposes, social and economic infrastructures (schools, health
institutions, roads, etc.)). As proclamation No.1161/2019, Article 6, that the government (a
Woreda or an Urban administration) may expropriate private property for public purposes where
it believes that it should be used for a better development project to be carried out by public
entities, private investors, cooperatives, societies or other organs with payment of compensation.
A land holder whose holding has been expropriated shall be entitled to payment of compensation
for his property situated on the land and for permanent improvements he made to such land shall
be equal to the value of capital and labor expended to the land.
Lack of constitutional force, coupled with government expropriation practice, has resulted in a
failure in proper implementation of the laws concerning expropriation, compensation and
valuation. These problems can be outlined in different ways: Who is entitled to compensation?
What compensation is made to affected people? When the compensation is made? What
determines the amount of compensation? In addition to aforementioned problems, valuation and
compensation practices vary greatly depending on the purpose for which land use rights is
expropriated, the source of finance for compensation and the institutions involved in the
expropriation.
The aim of this paper is focused on examining how land expropriation, valuation and
compensation procedures are implemented when privately held land and attached properties are
taken for public and private investment projects in Addis Ababa, assessing the fairness of
amount of compensation paid in the event of expropriation, and finally to make conclusions and
recommendations on valuation methods to be applied and compensation payments to be made.

1.2. Statement of the Problem

In Addis Ababa, the city’s infrastructures are not yet well developed. The need of suitable
property unit formation, the question of housing and other real estate construction for high rate of
population growth due to natural and rural-urban migration in the city, the need to solve
development and investment questions and other public interest requires the application of
expropriations as meaningful and useful management tool.
Expropriation of land from its initial owners and users has everlasting effects on their lives
especially if these people depend on the land for their livelihood. In the peripheral areas of many
African cities, public land acquisitions deny these land owners their means of livelihood and
hence change their lives forever. This is why there is a general reluctance and hostility when an
attempt is made to interfere with established land rights because land is a peculiar institution,

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which occupies a central position in the social organization of the community (Kiapi, 1969; cited
in Ndlovu, 2003). Any attempt to change the existing land relations whether by expropriation or
whatever means is likely to meet the strongest opposition even if such projects were
implemented by the government itself (ibid).
Urban redevelopment and expansion in city, is not only necessary but also unavoidable activity
due to the rapid rate of urban growth, growing socio-economic needs, sharp shortage of shelter
and rapid expansion of slums. As lessons from developed countries showed that urban
redevelopment is a complex and huge process that needs huge investment, well-organized
institution and commitment, well-prepared plan and policy and legal framework (Abay, 2003).
The magnitude of displacement from the inner city and resettlement in to urban outskirts has
been increasing from time to time. The city government is pushing inner city dwellers to the
urban outskirts in addition to the economical segregation by market forces in the city. As the
experience has shown the poor urban dwellers and farmers who are living in the peripheral areas
of the city are victims of the urban redevelopment and expansion. In one way or the other, the
redevelopment project in the inner city and resettlement in the urban outskirts has displaced
farmers and exposed to critical socio- economic problems, such as intensified poverty and
problems by making people landless, homeless and jobless. They lost their employment
opportunities, income sources, social organizations and access to infrastructures without any
government appropriate compensation and in the absence of re-establishment scheme.
Thus, numerous problems have surfaced during the implementation of the expropriation,
valuation and compensation. Some of these problems are similar to other countries but others are
rather peculiar to Ethiopia. Many of these problems include the inadequacy of compensation
amount/rate, inordinate delays, arbitrary compensation and lack of certified and professional
valuers etc. It is also noted that sometimes the government (City Administrations) expropriate
land without paying compensation or by giving very little compensation. For instance, as
described in Anteneh (2007), expropriation and compensation payments for reasons of township
expansion including the zoning of industrial parks are expected to be handled by city
administrations and municipalities from their own revenues (Anteneh, 2007). But this is mostly
in theory. In practice only those city administrations/municipalities which may have relatively
better revenue collection pay compensation. For the most part towns have been encroaching to
rural land with little or no compensation. In the early days of urban expansion most farmers were
not compensated. The problem is both legal and financial capacity. Due to the absence of
alternative property valuation methods and qualified and professional valuers, absence of
valuation provisions, lack of reliable and up to date valuation data, compensation is not assessed
based on market value. As a result of all these reasons, compensation payment does not satisfy
the interest of both parties in general and the land holders and right users in particular. In return
it has a long run negative impact on tenure security and economic development.

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1.3. Significance of the study

Solving most problems related to expropriation, valuation and compensation would help in the
realization of sustainable and institutionalized valuation systems, after which, will serve as a tool
for a number of public and private functions in the land sector, including a sound land
management system and tenure security, compensation for state acquisition, taxation of land, and
determination of the value of collateral assets. Thus, the study is important for a number of
reasons. First, the study is important for policy makers, donors and international organizations
that are currently seeking policy measures for valuation, compensation and expropriation
matters. Second, the government agencies, none governmental organizations (NGOS), and
private investors require land through expropriation for expansion of townships and investment,
construction of highways and feeder roads, quarrying, detours, construction of dams, power
stations, towers and access roads, as well as the taking of communal resources held by
communities. All these in turn require valuation of properties to pay fair and reasonable
compensation. Third, it can be used as a tool to facilitate real estate transaction and strengthening
market economy in real estate. Finally, the findings in this study shall be another contribution
into the existing stock of knowledge in the areas of expropriation, valuation and compensation in
Ethiopia. The research can, together with results from studies in other countries, be the base for
more general statements about expropriation, valuation and compensation strategies.

1.4. Objectives of the Study

In Ethiopia, various Federal, Regional and Local governments and organizations apply different
valuation procedures and rates to compensate both rural and urban land holders for land and
property taken from them under the power of eminent domain. Moreover, it is hypothesized that
the lack of application of standardized valuation and compensation procedures has created
situations of unfair valuation and compensation regimes whereby equal rights of landholding
provided under Federal and State Constitutions may be infringed upon. In view of these the study
is designed to address the following objectives:
First, it examines how land expropriation, valuation and compensation procedures are
implemented when privately held land and attached properties are taken for public and private
investment projects; with respect to the revised compensation proclamation No. 1161/2019.
Second, it assesses the fairness of amount of compensation paid in the event of expropriation;
Third, it examines the drawbacks of the existing laws and whether the methodology of valuation
used and procedures of expropriation and compensation are appropriate and are consistent with
the existing laws and regulations
Finally, to make conclusions and recommendations on valuation methods to be applied and
compensation payments to be mad

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Chapter Two: Literature Review

2.1. Real Property Valuation

"Property" means an aggregate of things or rights to things whose possession protected by law.
Property has a very wider meaning in its real sense. Property means buildings, vehicles,
machineries, and equipment. Property is divided into two broad categories: Real property (rights
in Land), and personal property (other than rights in Land).
"Real property" is an interest in real estate, which is normally recorded, in a formal document,
such as a title deed or lease. Therefore, real property is a legal concept distinct from real estate,
which represents a physical asset. Real property encompasses all the rights, interests, and
benefits related to the owner ship of real estate.
"Real estate" encompasses the land itself, all things naturally occurring on the land, and all things
attached below and above the ground to the land by the people, such as buildings and site
improvements and permanently attached to the building such as plumbing, heating and cooling
systems; electrical wiring; and built-in items like elevators, or lifts are also part of real property.
"Personal property" is defined by exception: property that is not real is personal. Personal
property by its nature is not permanently attached. major characteristic of personal property is its
movability without damage either to itself or to the real estate to which it is attached (such as:
vehicles, machineries and equipment) (IAAO 1990, 76).
"Valuation" can be defined as: “The art, or science, of estimating the value for a specific purpose
of a particular interest in a property at a particular moment in time, taking into accountable the
features of the property and also considering all the underlying economic factors of the market
including the range of alternative investments”. Asset valuation is defined as, “The art of
estimating the fair monetary measure of the desirability of ownership of specific properties for
specific purpose...” (Marston ,1970)
Valuation is based on the valuer’s knowledge of market conditions. Valuation of real property is
conducted for different purposes namely; expansion works of existing projects, revaluation of its
building assets, foreclosing properties of defaulted projects and for determining the amount of
compensation in expropriation undertakings.
Real property valuation is an art and a science of determining the most probable price of an
interest or right in property encompassed in an ownership for a particular purpose at a particular
point in time (French, 2003). The concern in real property valuation is to estimate the property
interests which can be defined by state or the law of individual jurisdictions and are often
regulated by legislation. It is widely used in financial and other markets to assist private or public
institutions decision making in the process of financial reporting, taxation, compulsory
acquisition, purchasing and selling, loan security or other statutory purposes (TEGoVA, 2016,
Adair et al,2003, IVSC, 2017).

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Valuations are required for many purposes relating to the development and subsequent
occupation and ownership of property. The purpose for which the valuation is required and the
type of property that is to be valued will determine the nature of the valuation instruction,
including the techniques employed and the basis on which value is to be estimated.
Different purposes to undertake valuation are;
 Development appraisal
 Transfer of ownership
 Monitoring of property investment performance Reporting the value of property assets
held by companies Loan security
 For taxation purposes
 Insurance risk assessment
 Compensation claims
The valuation process, whereby compensation is fixed according to law, is generally the most
difficult, time consuming, and litigated part of the expropriation process (Kitay 1985: 50). A
proper valuation process is the most important step for the land owner. This is because it is the
way to reach just compensation. Although the constitutions of most countries contain “just
compensation” phrases, they do not give any clue as to how to determine it. However, as
mentioned above, market value is usually suggested to calculate the amount of “just”
compensation (Ndjovu 2003: 43). Hence, just compensation has also been sometimes defined as
“the fair market value of the property as of the date of the taking, determined by what a willing
buyer and a willing seller would agree to, neither being under any compulsion to act” (Dennison
2006: 447). Valuation may be ordered either by the court or the administrative organ, as the case
may be. In countries where the administrative organ facilitates the valuation process, an owner of
land may dispute its validity and appeal to the courts. On the other hand, if it is the court that
organizes and selects experts, then it will accept the valuation report as evidence to give its final
expropriation decision. In both cases, the court may be an administrative court or a regular court.
The value of real estate property rights is the function of the property’s physical, locational, and
legal characteristics (Ling and Archer 2005: 5). The physical characteristics include the age, size,
design and construction quality of the structure, as well as the size, shape, and other natural
features of the land. For residential property, the locational characteristics include convenience
and access to places of employment, schools, shopping, health center, and other places important
to households (Ling and Archer 2005: 5). The locational characteristics of commercial properties
may involve visibility, access to customers, suppliers, and employees, or other availability of
reliable data and communications infrastructure (Ling and Archer 2005: 5).
Today it is a common activity in many countries even if the bases, approaches and methods of
valuation for a particular decision may vary based on countries culture and experience (Pagourtzi
et al, 2018). Although the characteristics of properties is widely varied, the Appraisal Institute

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(2013) suggests all valuation problems can be solved through the systematic application of the
valuation procedure. In this regard, the IVSC, suggests eight-step procedure which includes
definition of problem, site inspection and market studies, data collection, selection and analysis,
choice of appropriate valuation basis and method/s, reconciliation of values indicated and
arriving at the final opinion of value and reporting of the defined value (Babawale, 2013).

2.1.1. Bases of Property Valuation

A basis of value is not a valuation approach or method adopted but it is a statement of the
fundamental assumptions for assessing a valuation for a defined purpose (RICS, 2017, TEGoVA,
2016, IVSC, 2013). Bases of value describe the fundamental assumptions on which the reported
values will be based which includes issues like the nature of the hypothetical transaction, the
relationship and motivation of the parties, the extent to which the asset is exposed to the market,
and the unit of account for the valuation (IVSC, 2016). The most commonly used bases of
valuation in the valuation literature are Market Value, Mortgage Lending Value/MLV/,
Investment Value/IV/, Synergistic Value, Fair Value and Special Value.
Market value is the most common and widely accepted bases of value for a wide range of
purposes. It describes an exchange between parties that are unconnected and operating freely in
the market place, and ignores any price distortions (RICS, 2008).
It does not show an assessment of value over the longer term but only at the time of the
hypothetical transaction TEGoVA (2016). It excludes the additional costs that may be associated
with sale or purchase as well as any taxation on the transaction. It is internationally recognized
and has a long-established definition.
IVSC (2017) defined it as the estimated amount for which an asset or liability should exchange
on the valuation date between a willing buyer and a willing seller in an arm’s length transaction,
after proper marketing and where the parties had each acted knowledgeably, prudently and
without compulsion.
Similarly, fair value measures the estimated amount like market value but the parties in fair value
may be unconnected and negotiating at arm’s length, the asset is not necessarily exposed in the
wider market and the price agreed may be one that reflects the specific advantages or
disadvantages of ownership to the parties involved rather than the market at large (TEGoVA,
2016).
Market value is the appropriate base of valuation for expropriation (Parker, 2016). In many
countries, even additional replacement costs to the market value to the compensation is
considered (Tanrivermis and Aliefendioglu, 2017). But, TEGoVA (2016) argues there are
circumstances where alternative bases may be required or may be appropriate. It is particularly
true in cases of bubble- tendencies and cyclical movements in property markets and stock
markets.

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With regard to MLV, although it is not acknowledged as a basis of value in the IVS, it is applied
in the TEGoVA and RICS valuation standards in UK and EU (RICS, 2018, TEGoVA, 2016). It
is based on sustainability, avoidance of any speculation, traceability, standardization and
marketability (Bienert and Brunauer, 2007). It is used by credit institutions for collateral
valuation purpose. This is because it is a value-at-risk approach to manage the risk exposure of
them taking into account special safety requirements (TEGoVA, 2016). MLV is likely, in most
market conditions, to be below MV but offers a guide to expected underlying long-term trends in
the market (Anop, 2015). But may be indistinguishable from MV in stable markets.
Investment value, is mostly important to measure the performance of an asset against an owner’s
own investment criteria (RICS, 2017). It is the maximum price that a known individual bidder
would offer according to his specific investment requirements but not measure the overall
judgement of the market on the property (TEGoVA, 2016). Although MV, IV, MLV and Fair
Value are the common bases of valuation for different purposes, there are also other bases of
value including equitable value, synergistic value, liquidation value, and special value where
they can be applied in certain circumstances.

2.1.2. Real Property Valuation Approaches

Although there are certain differences in application and greater differences in nomenclature,
there are three principal approaches to real property valuation: the market approach, the income
approach and the cost approach (TEGoVA, 2016). The theoretical bases of these approaches are
dated back to 1920 when Alfred Marshall combined the supply-cost theory with demand-price
theory as a basis of value (Moore, 2014). The three approaches are not mutually exclusive, with
the use of more than one approach for cross-verification is encouraged, particularly where
valuation inputs are limited (Parker, 2016). In cases where the valuer has high degree of
confidence in the accuracy and reliability of a single method, they are not required to use more
than one approach of valuation (IVSC, 2017). But, using more than one valuation approach is a
normal practice, or even a legal obligation for some valuation purposes in some instances, which
depends on property type and available information (Schulz, 2003). It is especially recommended
where there are insufficient factual or observable inputs for a single approach to produce a
reliable conclusion (IVSC, 2017). For instance, in Belgium each property type needs to be
valued by two most appropriate approaches and checked or controlled by at least one other
approach (Adair et al., 2003). When more than one valuation approach is employed, the valuers
has to make a final reconciliation step to derive a final estimate of the market value (Schulz,
2003).
The adoption of the three approaches for a particular property being valued depends on the
appropriate basis of value, premises of value, purposes of valuation assignment, appropriateness
of each approach in view of the nature of the asset, the market condition and the availability of
reliable information needed to apply the approach (Aro-Gordon, 2015, IVSC, 2017). But valuers
are responsible to choose the approach/es that, in their opinion, are the most appropriate to the
property being valued unless there is legislation or statute applicable (TEGoVA, 2016).

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The Market Approach is the most widely used and accepted approach to determine value in
real estate valuation practice for various purposes. It is based on the theory of value which says
value of the real estate is based upon the views of the typical buyer and seller of the property,
independent of cost, to create or wear and tear (Miller and Geltner, 2004) and founded on the
principle of price equilibrium (IVSC, 2017). As it is based in comparison, in market approach the
level of similarity between the subject asset and those assets recently transacted is of
fundamental importance, as property interests are not homogenous (IVSC, 2017). When the
valuer judgement is applied consistently, the market approach is both logical and rational,
leading to an assessment of value that is transparently supported (Parker, 2016).

The Income Approach, on the other hand, involves estimating the market value by assessing the
income that the property is expected to generate, then discounting the income stream to arrive at
the present value (Pagourtzi et al., 2018). It is based on the economic principle of anticipation of
benefits (IVSC, 2017) and the value theory which assumes that the value of the property is based
upon the typical investor ‘s yield requirements, current financing possibilities, and the property
risks (Miller and Geltner, 2004). It is appropriate in cases where yields can be established easily
as in the case of office markets where more evidence of rental transactions exist (TEGoVA,
2016).

The Cost Approach has rooted its source from the classical school of thought at the time of
Adam Smith (Jaffe and Lusht, 2003). It considers solely from the supply side of economics
equating cost with value without considering the crucially important demand element. The
underlying value theory for it is the value of the property is inherent in the cost to create the
property based on land acquisition and building costless wear and tear and depreciation (Miller
and Geltner, 2004). It is an approach based on the economic principle of substitution stating that
a buyer will pay no more for an asset than the cost to obtain an asset of equal utility whether by
purchase or by construction, unless undue time, inconvenience, risk or other factors are involved
(IVSC, 2017). However, the application of this principle in the context of property is much more
challenging, exacerbated by the type of property for which the approach is considered (Parker,
2016). It is particularly more problematic given that construction of buildings needs time and
that land for building purposes might not be immediately available, prices and costs will diverge
in the short-run (Schulz, 2003). Moreover, the true worth of an asset will not be the same as its
cost but a function of the expected benefits or cash flows derivable from that property. Since cost
approach is not market driven, it should not be looked on as a primary approach in estimating the
value of the property. However, it can be used when there is either no evidence of transaction
prices for similar property or no identifiable actual or notional income stream that would accrue
to the owner of the relevant interest (IVSC, 2017).

In many European countries including Finland, France, Norway, Sweden and the UK, the cost
approach is used only for specialized properties where there is no transaction evidence and where
there is no useful or relevant evidence of recent sales transactions due to the specialized nature of
the asset (RICS, 2017b, Adair et al., 2003). In other European countries like Germany,
Switzerland, Spain, Norway, Belgium and Portugal, it is more widely used, usually in tandem
with other approaches, the exchange value being a weighted average of the two outcomes (Adair

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et al., 2003). In these countries when the end result of a valuation is weighted almost entirely
towards the outcome of a comparative approach, the cost-based figure is retained as a check
(Adair et al., 2003).

2.2. Expropriation

2.2.1. Theoretical Foundations of Expropriation

On the nature and source of eminent domain power, two main theories exist. These are called as
the ‘‘reserved rights’’ and ‘‘inherent powers’’ theories. The first theory was formulated by
European jurists. One such scholar, Grotius, espoused the view that the state had original and
absolute ownership of all the property possessed by its individual members antecedent to their
possession, and this gave rise to the ‘‘reserved rights’’ theory of eminent domain (Harrington
2001:1250). According to this theory, a citizen’s possession of property was dependent on a
grant by the sovereign and his continued enjoyment of it was subject to an implied reservation
that the state might retake the property at any time for a public purpose. In this view, an
individual’s ownership of property is limited to a mere possessory right, at least with respect to
the government (Harrington 2001:1250). The right to hold property is, therefore, subject to a
tacit agreement between the citizen and the sovereign that the property might be reclaimed by the
latter to meet public necessity, and the citizen holds his land with such awareness and cannot
complain of injustice when it is lawfully exercised.
The consequences of such a reserved-rights theory are that it has the potential to deny
compensation to the landowner and to eliminate the necessity of going through all the judicial
procedures. The clearest objection to this theory has come from American courts, for whom
reservation of rights in the sovereign “sounds too much like feudalism” (Harrington 2001:1251).
The most obvious rebuttal to this theory is that it simply is not in accord with actual practice
(Stoebuck 1972: 558). Historical precedents in America and England show no reservation of
power in the hand of the sovereign. Even in continental Europe in the Roman period, there were
items of evidence of compensation for the taking of private property (Matthews 1921)
Confronted with many theoretical problems, as well as because of the nature of the American
federalist structure, many courts in the United States eventually rejected the theory of reserved
rights and came to view eminent domain simply as an inherent right of sovereignty. The state’s
power to take land for public use came to be regarded as a power which inheres in the right of
the state to govern the polis - which is to say, inherent in its ‘‘police power’’ – and was not
dependent on any pre-existing property right. (Harrington 2001:1251) According to this view,
governments have the sovereign power to enact any regulation affecting persons or property
located within their borders, subject to such limitations as might be imposed by their respective
constitutions. By adopting this approach, the American courts equated the source of power for
eminent domain to other similar powers of the state, such as police powers and the power to levy

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taxes, which are inherent powers founded in the primary duty of government to serve the
common needs and advance the general welfare of the people. Currently, the principle of
inherent power seems dominantly accepted everywhere. It is said that the power of eminent
domain is an inherent attribute of sovereignty and exists even without constitutional recognition;
therefore, constitutional provisions relating to eminent domain must be construed as limitations
upon, rather than grants of, such power. (Comments Yale Law Review 1949:599-600)
Although it seems that these theories propagate two different ideas, in reality, the underlying
principle is one and the same. Both inherent powers and reserved rights theories permit no real
restraint on the sovereign’s exercise of the power of eminent domain. A sovereign's eminent
domain power is absolute and total. It is superior to all other property rights, and every owner of
property holds his land subject to the power of eminent domain. The taking of property by a
government’s exercise of its power of eminent domain per se is not a government infringement
of the property owner's fundamental right to own property, since the power of eminent domain is
a legitimate constitutional power.
Such power antedates constitutions and legislative enactments, and exists independently of
statutory or constitutional sanction or provision. (Francis, Amendola, William, John, and
Kennel). Thus, modern laws only try to recognize it and prescribe limits for its application. A
reading of the expropriation laws of most countries reveals that they confirm the state's authority
to expropriate private property, but impose two conditions on the exercise of such authority: the
taking must be for a public use, and just compensation must be paid to the owner.

2.2.2. Current practices and concepts of Expropriation

The term expropriation is used in its widest sense to include all forms of taking of private
property by a State for public use, in time of peace, war or national emergency (Epstein, 1985).
Expropriation is the compulsory acquisition of property. The owner of the property need not
want to sell and in fact, he does not sell his property is taken away from him by compulsion, and
against his will. The remedy available to him is compensation determined in accordance with the
statutes. The expropriator (usually the State) and the expropriates (the affected people) may
come to an agreement with regards the amount of the compensation. The underlying principle of
expropriation by a statutory power is generally not aimed at acquisition but rather to serve some
or other public need (Searles, 1974). Expropriation or compulsorily acquisition refers to
government’s power to force a person to sell his home, his business, or other property to the
government at a price it deems “just compensation” is one of the most extreme forms of
government coercion, and today among the most common (Sandefur, 2006).
Powers of “expropriation” have been practiced in various societies for a very long time but often
characterized by infrequent procedural irregularity (Searles, 1974). Biblical narrations indicate
the existence of such powers in those ancient societies.10 In classical times, the taking of
property for public purposes was also practiced especially among the Romans11 and Greeks.12
It is therefore clear that the concept of expropriation has a long history (Bryant, 1972). This

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power of property taking is referred to as “eminent domain” in America, Some US states

including New York and Louisiana use the term “appropriation” as a synonym for the exercising
of eminent domain powers, “Compulsory purchase” in United Kingdom, New Zealand, and
Nigeria, “resumption” and “expropriation” in South Africa and Canada. This is an action of the
state to seize a citizen’s private property, expropriate property, or seize a citizen’s rights in
property with due monetary compensation, but without the owner’s consent. The property is
taken either for government use or by delegation to third parties who will devote it to public or
civic use or, in some cases, economic development (Chan, 2003; Denyer-Green, 1994; Eaton,
1995). The exercise of expropriation13 or compulsory acquisition is not limited to real property.
Governments may also condemn personal property, such as supplies for the military in wartime
or franchises. Governments can even condemn intangible property such as contract rights,
patents, trade secrets and copyrights (Denyer-Green, 1994).
With the development of the concept in the contemporary world, many democratic states have
provided legal flexibility of land acquisition methods in their compulsory purchase statutes. The
traditional use of force is no longer mandatory and land could either be acquired compulsorily or
by agreement (Almond & Plimmer, 1967). When such an agreeable purchase is done, it is said to
have been done under the shadow of compulsory purchase (Moore, 1990). This agreement
option, used where the number of properties required is small and the ‘need’ is less urgent, is
quicker, friendlier, and less expensive. In the western societies based on private ownership
expropriation of private property for the public benefit has been enabled by legislation. The idea
originates from the French revolution in 1789 and the Napoleonic law on expropriation of 1810,
although the concept of expropriation is much older, for instance, already known in the Roman
society (Wiiala 1966; Hyvönen 1976; cited in Viitanen, 2002). It is seen necessary to limit
private rights when required for the public good. This will also benefit the private sector when
only the private losses are compensated (Viitanen, 2002). Originally, the power of eminent
domain was assumed to arise from natural law14 as an inherent power of the sovereign state. It is
therefore clear that the concept has a long history (Bryant1972; cited in Cletus E. ndjovu, 2003).
Similarly, in modern times, the concept has been extensively used throughout the world.
Traditionally, compulsory purchase has entailed a non-consensual transfer of property from
private to public hands using legal compulsion whereby property owners have no freedom to
choose the buyer nor to determine or influence the price. Where the use of force is imminent in
acquiring the property, democratic constitutions have tried to justify it socially, politically,
economically and most important, legally. If such purchases, effected by the government have
some social justification then compensation claims arise (Michelman, 1967).
With the development of the concept in the contemporary world, many democratic states have
provided legal flexibility of land acquisition methods in their compulsory purchase statutes. The
traditional use of force is no longer mandatory and land could either be acquired compulsorily or
by agreement (Almond & Plimmer, 1967). Where the acquisition authority and the real property
owner would negotiate to reach an efficient solution where no one is made worse-off and no
government intervention would therefore be required. However, if property owners hold out

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against the acquisition and the parties do not agree on the take-over, then the hidden powers of
eminent domain are applied as the tool of the last resort (Zrobek & Zrobek, 2007).
Expropriation is therefore an exception from the general civil principles of ownership transfer;
real property can be expropriated only if public purposes cannot be achieved in any other way
but by depriving someone of their rights to a real property or restricting such rights. Another
condition to be met is that the rights to the real property cannot be acquired by concluding a
relevant contract. Application of this form of ownership right transfer by the state or local
administrative bodies is subject to many formal restrictions and procedures which have to be
strictly followed. If the real property, which is necessary for public purpose, cannot be acquired
by purchase the expropriation procedure is the last resort (Zrobek & Zrobek, 2007).

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Chapter Three: Materials and Methods

This research will use a case study method, which uses several units of inquiry. The purpose of
the study, the nature of data required and the availability of resources will largely influence the
choice of this research strategy. The nature of the problems, objectives, and the research
questions will have a bearing on the choices to be made. In expropriation, the focus will be on
how the expropriation was completed and how it was carried out and weather the compensation
was paid or not and if it was, then how it was assessed. If, no compensation was paid, then was it
investigated for why it was not? And, in both cases did all parties involved regarding these
decisions as fair and reasonable?

3.1. Methods of Data Collection

The first methodological task to collect data and information is to identify representative areas to
get to the various target groups in the city. Pertinent information will be gathered from all
concerned parties using appropriate mechanisms taking in to consideration the following factors.
First, size of the affected communities and persons; second, accessibility in tracing the
households which have displaced and moved away from the areas as a result of the
expropriation; and third, size of projects and reasons associated with the expropriation.
In this research the following main methods of data collection will be used, namely primary data
through structured and semi structured questionnaire interviews, key informant interviews and
focus group discussions. In addition to that secondary data analysis, both qualitative and
quantitative research methods will also be applied. By using a combination of all these methods,
the deficiencies that flow from employing only one investigator or one method will be reduced.

3.2. Methods of Data Analysis

In this study, both qualitative and quantitative data will be used both of which are equally
regarded as good methods (Nachmias & Nachmias, 1997). Quantitative data collected during the
field study will be analyzed by using simple descriptive statistical methods such as averages,
ratios, and percentages. Frequency analysis contained information that provided a summary of
the number of responses to each question on the survey form. On the other hand, qualitative data
will also be collected, analyzed and interpreted against the relevant research questions.

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Work Plan

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Bibliography
A., B. Y. (2013). Expropriation, Valuation and Compensation in Ethiopia. Stockholm, Sweden:
Royal Institute of Technology (KTH).
A., D. W. (2009). Land Valuation for Expropriation in Ethiopia: Valuation Methods and
Adequecy of Compensation. 7th FIG Regional Conference Spatial Data Serving People:
Land Governance and the Environment – Building the Capacity, (pp. 1-38).
Hanoi,Vietnam.
A., H. B. (2019). REAL PROPERTY VALUATION IN EXPROPRIATION IN ETHIOPIA;
BASES, APPROACHES AND PROCEDURES. African Journal of Land Policy and
Geospatial Sciences, 1-12.
Council, I. V. (2020). International Valuation Standards. 4 Lombard St, LONDON : FSC.
FDRE. (2019, September 23). FDRE Proclamation No 1161/2019. Federal Negarit Gazeta, pp.
1-25.
S., E. (May, 2017). Assessment of Real Property Valuation Method Practice in Ethiopian Banks-
in Addis Ababa. Addis Ababa: Addis Ababa University.
Wyatt, P. (2013). Property Valuation. Oxford: A John Wiley & Sons, Ltd.

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