Djibouti is a small country located in the Horn of Africa, with a population of about one million people.[1] The population comprises 60 percent Somali, 35 percent Afar, originally from Ethiopia, as well as French, Italian and Arab minorities.[2] The population is predominantly Muslim (94 percent) and six percent Christians but there is tremendous religious tolerance and peaceful co-existence.  Between 1975 and 1991, a sizeable number of refugees escaping Ethiopian civil wars moved into the country, a trend observed until 2018 when Eritrea and Ethiopia signed a peace agreement. The country has less 1 000km2 of arable land, which represents 0.04 percent of its total land area, making it almost entirely dependent on imports to address its food requirements.[3] Djibouti’s advantage comes from its strategic location along the Red Sea linking Africa and the Middle East. This strategic location has attracted a number of countries such as the United States, China and Japan, as well as the North Atlantic Treaty Organization, to establish military bases in the country.[4] Djibouti Port is located along the Suez Canal, Red Sea and the Gulf of Aden shipping route, which connects the Mediterranean Sea and the Indian Ocean, considered one of the most important waterways in the world.[5] It is estimated that 30 percent of all annual global shipping goes through this important, albeit narrow, passage. Analysts argue that Djibouti’s geostrategic location coupled with its stability in a volatile region has made it a central focus for world powers.[6]

Djibouti is highly urbanised (85 percent of the population lives in urban areas)[7], especially in comparison to other developing countries, but its urbanisation is by necessity, in view of the little rural productivity possible because of its harsh climatic conditions.[8] As such, no other nation in its lower middle income status is as urbanised. The poor rural conditions have effectively pushed most of the population to urban areas but with no employable skills or income to keep up with the cost of urban living. Basically, high urban population growth has significantly driven the need for housing without a corresponding supply. This is because demand must be matched by ability and willingness to pay for the housing at a given price over a given period. In 2018, Amina Abdi, Djibouti’s Minister for Housing was quoted as saying: “The Government of Djibouti has the ambition to eliminate slums in its territory and provide good living conditions to all its citizens.”[9] To address this commitment, Djibouti allocated Fdj3 922 million (US$22 054 010), 6.1 percent of gross domestic product (GDP), to housing subsidies in 2020.[10] In addition, Djibouti has over the years experienced a significant influx of refugees from war-torn neighbours such as Somalia, Eritrea and Yemen. The World Bank documents that, as of January 2020, the country was hosting 30 794 documented refugees and asylum seekers, largely concentrated in Ali Addeh, Holl and Markazi refugee camps.[11] Djibouti requires, at a minimum, decent housing to accommodate 15 percent of its population that are currently deprived of the most basic amenities. An estimated 150 000 citizens live in refugee-like conditions but are undocumented.[12] In addition, it is estimated that one-third of the Djibouti population lives in slums, and trend spurred by both internal and external migratory pressures and an absence of affordable accommodation options.[13]

As at September 2020 Djibouti had reported 5 403 COVID-19 cases, 5 333 recoveries and 61 deaths.[14] This represents a significant infection and death rate in view of the country’s population size of less than one million. As such, the Africa Centres for Disease Control and Prevention argues that Djibouti had the highest COVID-19 prevalence in Africa.[15]  Nonetheless, Djibouti has made a number of efforts to contain the spread of the virus and mitigate its effect on housing. First, the government ordered lockdowns, but then lifted the restriction in May 2020 largely due to economic hardship experienced by the predominantly poor population.[16] The COVID-19 response was boosted by the approval by the International Monetary Fund (IMF) of a Fdj 7.7 billion (US$43.4 million) loan to the country to not only fight the pandemic but also as debt relief under the Catastrophe Containment and Relief Trust to address the COVID-19 pandemic. The loan is expected to provide revenue of Fdj4.1 billion (US$2.3 million) over five months, and possibly up to Fdj14.6 billion (US$8.2 million) over 23 months from May 2020.[17]




[1] Central Intelligence Agency  The World Fact Book. Dijbouti. (Accessed 5 September 2020.

[2] Infoplease (2012). Djibouti Overview: Land and People. (Accessed 20 September 2020).

[3] World Bank (2019). The World Bank in Djibouti.,of%20about%20865%2C000%20(2011).&text=Djibouti’s%20strength%20lies%20in%20its,Africa%20and%20the%20Middle%20East (Accessed 20 September 2020).

[4] Dahir L.A. (2017). How a tiny African country became the world’s key military base. Quartz Africa. (’s%20geostrategic%20location,critical%20corridor%20for%20international%20shipping (Accessed 20 September 2020).

[5] Goche, S. (2016). Djibouti: A Tiny Haven with Strategic Importance in a Troubled Neighbourhood. Future Directions.  (Accessed 20 September 2020).

[6] Goche, S. (2016). Djibouti: A Tiny Haven with Strategic Importance in a Troubled Neighbourhood. Future Directions.  (Accessed 20 September 2020).

[7] Central Intelligence Agency. The World Fact Book. (Accessed 5 September 2020).

  • [8] Katuri, S.C. (2018). The African Country more urbanized than Germany. OZY Media Company. 12 February 2018. (Accessed 30 August 2020).

[9] World Bank (2018). World Bank supports efforts to upgrade Djibouti slums. (Accessed 5 September 2020).

[10] IMF (2020). IMF Staff Country Reports: Country Report No. 20/159. (Accessed 28 August 2020). Pg. 1.

[11] World bank (2020). Djibouti COVID-19 Response (P173807). (Accessed 28 August 2020). Pg. 4.

[12] World Bank (2018). World Bank supports efforts to upgrade Djibouti slums. (Accessed 5 September 2020).

[13] World Bank (2017). Djibouti Integrated Slum Upgrading Project (P162901). (Accessed 3 September 2020). Pg. 4.

[14] Worldometer.  Djibouti – Coronavirus cases. (Accessed 20 September 2020).

[15] Anadolu Agency (2020). Djibouti sees rapid spike in COVID-19 cases. (Accessed 20 September 2020).

[16] Aljazeera (2020). People need to make a living: Djibouti eases COVID-19 lockdown. (Accessed 20 September 2020).

[17] IMF (2020). Press Release No. 20/211. (Accessed 20 September 2020).

Access to Finance

Djibouti has a well-developed financial system, especially when compared to its neighbor Eritrea. The country’s banking sector largely practices Islamic banking, since about 94% of the population is Muslim. Because Djibouti practices Islamic banking, where charging interest rates is unacceptable, it is not easy to conclusively determine mortgage interest rates using conventional banking practices. Nevertheless, lending rates in the country average 7% per annum, a much better rate compared to the prevailing mortgage lending rate in Kenya (the biggest economy in the region) which stands at 13%.

The country has 10 conventional commercial banks, three Islamic banks, 18 forex bureaus, four microfinance institutions, and two specialised financial institutions. The Central Bank of Djibouti (Banque Centrale de Djibouti)is the monetary authority charged with the regulation of all commercial banking in the country.

With low lending rates and low inflation rates, Djibouti provides great opportunities for real estate development. Access to home financing is also available from leading banks. For instance, one of the leading Islamic commercial banks (Salaam African Bank) is financing 70% of the value of a residential property. The low inflation rates regime is projected to remain stable in the coming years. For instance, the country’s inflation rate is projected to hold at 2% in 2022 and 2.3% in 2023. The World Bank Doing Business 2020 report documents a number of positive developments in Djibouti with encouraging implications for real estate developments. These include strengthening access to credit by implementing a functional secured transactions system and a unified notice-based collateral registry, strengthening minority investor protections by raising corporate transparency, and easing resolution of insolvency issues by facilitating the commencement of proceedings while increasing the effectiveness of court processes.

Conversely, bottlenecks in the system curtail fast project implementation in the country. Djibouti lacks a comprehensive and operational electronic database for checking mortgages and the financial system rarely lends to small businesses or start-ups. Thus, Djibouti has a poor record of non-performing loans by global standards. While the global average for non-performing loans in 2019 expressed as a percentage of total bank loans stood at 5.06%, Djibouti had 16.04% with an average of 17.33 % between 2012 and 2019.

To mitigate the adverse financial risks arising from COVID-19, the International Financial Corporation(IFC) partnered with some Djibouti banks such as assist Africa Bank(EAB). IFC will support EAB strengthen its risk, trade, and credit management framework as well as its capacities to be at par with international best practices so as to achieve sustainable growth. The EAB, which practices Islamic banking, is a major player in the Djibouti Economy, having seven branches and wide market outreach.

Although current microfinance data is not available, a number of microfinance institutions have been financing home development. These include Islamic Microfinance, which financed 274 developers in 2015. While four microfinance institutions are listed on the Central Bank of Djibouti website, their respective websites are unavailable and the scope of their reach is unclear. Broadly, there is evidence to suggest that domestic credit to the private sector as a percentage of GDP in the country has continued to fluctuate over time. For instance, the ratio was 21.32% (2018), 22.18 % (2014) and 20.33% (2016).

[1] Banque Centrale de Djibouti. Banque Centrale de Djibouti. (Accessed 20 September 2020).

[2] Statista (2020). Djibouti: Growth rate of the real gross domestic product (GDP) from 2009 to 2021 compared to the previous year. (Accessed 20 September 2020).

[3] World Bank. Inflation, consumer prices (annual %) – Djibouti. FP.CPI.TOTL.ZG ?locations=DJ (Accessed 20 September 2020).

[4] Statista (2020). Prevailing mortgage interest rates in Africa in 2019, by country. (Accessed 28 August 2020).

[5] New African (2020). Djibouti: Maintaining a financial gold standard. (Accessed 28 August 2020).

[6] Heritage Foundation (2020). 2020 Index of Economic Freedom. (Accessed 30 August 2020).

[7] Central Bank of Djibouti (2020). Banking Establishments.

(Accessed 30 August 2020).

[8] World Bank (2020). Doing Business 2020.

(Accessed 30 August 2020). Pg. 24.

[9] Myfinb. Djibouti. (Accessed 30 August 2020).

[10] The Global Economy (2020). Djibouti: Non-performing loans.  (Accessed 30 August 2020).

[11] Making Finance Work for Africa. Financial Sector Overview.

(Accessed 30 August 2020).



Djibouti has high poverty rates and an unemployment rate of 78%. Due to the high poverty and unemployment rates, affording decent houses is unattainable for most of the population. Although Djibouti recently graduated to low middle-income status the reality on the ground has not changed. It is still a very unequal country. The hot and dry desert-like climate, aggravated by natural disasters such as locust invasion and flooding, has conspired to force the country to import 90% of its foodstuffs. This situation has had wide negative implications on the population’s disposable incomes and resultant aggregate demand. With low disposable incomes, the aggregate demand for decent housing is low, implying only a small segment would be targeted for decent medium to high-end housing.

Djibouti has benefited from rich migrants from Yemen and Somalia looking for peaceful countries with Islamic culture. Decent housing (whether rented or owner-occupied) is therefore pricey by regional standards. The Numbeo of estimates that to rent a one-bedroom apartment at Djibouti city center ranges between Fdj89246 (US$502) and Fdj240000(US$1349) while a 3-bedroomed house at the same location ranges between Fdj130000 (US$731) and Fdj600000 (US$3374). Outside the city center, the Numbeo report estimates that a 1-bedroomed house will range between Fdj89483(US$503)and 177935(US$1000) while a 3-bedroomed house will range between Fdj88830(US$499)and Fdj150000(US$843). According to Numbeo, buying an apartment will cost Fdj285000/m2 (US$1602/m2) in the city Centre and Fdj185000, m2(US$1040/m2) outside the city center.

[1] World Food Programme. Djibouti.,population%20living%20in%20extreme%20poverty (Accessed 7 September2020).

[2] Statista. Djibouti: Unemployment Rate from 1999-2019. (Accessed 30 August 2020).

[3] Numbeo. Cost of living comparison between Egypt and Djibouti. (Accessed 30 August 2020).

[4] (2019). Opportunities for investment. (Accessed 30 August 2020).


Housing supply

Djibouti is currently reeling under the weight of uncontrolled slum expansion, hosting more than one-third of the city population and severely impairing the provision of basic.

amenities. With over 100 000 migrants living in Djibouti’s informal settlements, the migrant population is more than 10% of the country’s population. The World Bank observes that Djibouti has the highest refugee ratio in the world. Considering migrants do not seek permanent abode along the migratory route, most houses developed along such routes are semi-permanent structures or shanties devoid of basic amenities. This is especially so since migrants mostly lack the purchasing power to buy houses even if they wanted to. The government has been funded by the World Bank’s fund for the poorest countries (International Development Association-IDA), to support the refugee influx. The funding will benefit about 114000 Djibouti-Ville slum dwellers of Ali-Addeh and Hol-Hol, which host close to 78% of the total refugee population.

Although the country endeavors to achieve Sustainable Development Goal (SDG) 11 on sustainable cities and communities, this appears to be a tall order. The SDG index for the country shows that as of the year 2018, the score tracking the country’s proportion of the urban population living in slums was stagnating or increasing.

The major construction companies in Djibouti are controlled by foreign companies such as those involved in Chinese-funded projects as well as other foreign companies awarded government tenders through open tenders. The China Merchant Group has significantly supported government efforts to ensure citizens get decent housing by constructing 1000 housing units as part of its corporate social responsibility.

The urban transport infrastructure is unplanned and largely mirrors housing development. Intrinsically, the WorldBank observes that;“…Routes are not centrally planned, but have developed in response to demand and the street grid. Place Harbi, Hayableh, and PK 1233 are some key nodes in the network. Only 3% of Djiboutians own cars, and the rest rely on public transport. It seems only about 40% of Djibouti-Ville residents use public transport regularly. This means the rest must rely on walking, or on employer-provided transport or taxis.

[1] World Bank (2017). Djibouti Integrated Slum Upgrading Project (P162901). (Accessed 3 September 2020). Pg. 4.

[2] World Bank (2017). Djibouti Integrated Slum Upgrading Project (P162901). (Accessed 3 September 2020). Pg. 4.

[3] World Bank (2017). Djibouti Integrated Slum Upgrading Project (P162901). (Accessed 3 September 2020). Pg. 4.

Property Markets

Property markets in Djibouti have borne the brunt of Covid-19 due to the disruption of the supply chains of construction raw materials and the limits on the movement of construction workers

Legally, all land in Djibouti is state-owned but private ownership of urban land is allowed. The government does not place restrictions on land ownership and development in urban areas save for normal licensing or permit requirements. Djibouti has made major strides in improving its business environment and this has enabled it to improve its global Doing Business ranking from position 154 in 2018 to 99 in 2019. Registering property in Djibouti entails six procedures, on average takes 24 days, and costs 5.6 percent of the property value. Thus, Djibouti ranks 117 globally on the registering property score.

Djibouti has put in place a new procedure that enables a creditor to obtain a mortgage guarantee within a realistic duration, a provision enabling both creditor and debtor to agree on the private sale of mortgaged property subject to judicial control. Importantly, Doing Business 2020 observes key developments in Djibouti with implications for housing development. These include: strengthening access to credit through the implementation of a functional secured transactions system and a unified notice-based collateral registry; protecting minority Investors by increasing corporate transparency; making it easier to resolve insolvency by facilitating the origination of court proceedings while increasing the effectiveness of court processes; and introducing a minimum wage of Fdj35000 (US$198) per month. While these are welcome developments in the real estate sector, the increase in minimum wage will put pressure on the already depressed sector reeling from the effects of the pandemic.

[1] World Bank (2019). Doing Business 2019: Djibouti Jumps 55 Ranks. (Accessed 3 September 2020).

[2] World Bank (2020). Doing Business 2020. (Accessed 28 September 2020). Pg.4

[3] World Food Programe (2020). Djibouti.,population%20living%20in%20extreme%20poverty  (Accessed 7 September 2020).

Policy and Legislation

Djibouti considers that once it has ratified and published international treaties and agreements, these treaties and agreements are published in Djibouti’s Official Journal, and will be superior to its own laws and the constitution. As such, international legal instruments are superior to the country’s internal law.

Djibouti is a member of a number of trade organisations and regional blocs which entitle the country to “aid for trade” and trade initiatives such as the World Trade Organization (WTO), the League of Arab States (LAS), the Cotonou Agreement, and the Common Market for Eastern and Southern Africa (COMESA). As a member of the COMESA Free Trade Area (FTA), imports into Djibouti from member countries attract no tariffs, and therefore construction materials imported from these member countries will be much cheaper than those from non-member countries. While materials can be sourced from COMESA member states, international companies such as Lafarge, Dangote, and China Resources Cement have increased their capacity to produce cement within Djibouti Obtaining a construction permit in Djibouti has been made easier by the reduction of the cost of concrete inspections and by the implementation of decennial liability for all professionals involved in construction works

According to the 2021 Index of Economic freedom, the country needs to implement deep and broad reforms so as to improve its scores on property rights, the effectiveness of the judiciary, and government integrity. The report suggests that these reforms need to be institutionalised. Information on building laws is available online and accessible to the public free of charge. Such laws are also available to the public in the form of Gazette notices in hard copies. The Ministry of Habitat, Urban Planning and Environment (Ministère Délégué auprès du Ministère de l’Habitat, de l’Urbanisme et de l’Environnement chargé du Logement, MDMHUEL) is responsible for housing policies in the country.

[1] World Bank (2020). Doing Business 2020. (Accessed 30 August 2020). Pg. 14.

[2] World Bank (2020). Doing Business 2020. (Accessed 4 September 2020). Pg. 29.

[3] Heritage Foundation (2020). 2020 Index of Economic Freedom. (Accessed 30 August 2020).

[4] The Economist Intelligence Unit (2015). Government’s 2020 vision for 100% renewable energy. (Accessed 4 September 2020).

[5] Heritage Foundation (2020). 2020 Index of Economic Freedom. (Accessed 30 August 2020).


Djibouti is a peaceful country with a great business environment. In view of the location of the country along the migratory route to the Arab peninsula, home developers may consider developing low-cost housing with basic amenities to support migrants. Although some of the country’s infrastructure was damaged by the floods, the UN-Habitat in partnership with other UN agencies and the World Bank is supporting the country’s housing and settlement sector in identifying the damages and outlining a recovery strategy. Therefore, home developers may consider exploring opportunities that emanate from the support Djibouti is getting from development partners. These opportunities may include looking for tenders from the development partners or partnering with them in the development of the infrastructure. Perhaps more urgently, is the need to develop Water, Sanitation, and Hygiene (WASH) infrastructure available and accessible to the public, especially the poor. Djibouti has a major shortage of public toilets, leading to the high prevalence of water-borne diseases. Public-private partnerships (PPP) to address these WASH challenges should be considered.

The private sector in Djibouti plays a major role in real estate development, especially in developing high-end homes. Salaam properties, a member of the Salaam group with significant control of the financial services sector, is a key property developer in Djibouti. Professional architects and building designers are available to offer professional services and as such the country has significant professional skills to support housing development.

Djibouti has one of the most stable inflation rates in the region, at 1.8% in 2020, compared to 3.3% in 2019. Djibouti has no forex controls and the foreign exchange rate has been stable in the recent past. Foreign investors can therefore easily transfer their profits out of the country without restrictions.

Djibouti’s port activities are expected to rebound, creating further demand for housing among foreign port employees and construction workers. Many rich immigrants are entering Djibouti from Somalia, Yemen, and other Muslim countries currently going through conflicts. These individuals are taking advantage of the freedom enjoyed by foreigners to invest in good houses in Djibouti. Residential homes targeting these immigrants would be worth considering.

[1] World Bank (2020). New $25 Million Support Will Help Djibouti Grow its Economy and Improve Access to Services. (Accessed 5 September 2020).

[2] World Bank (2020). New $25 Million Support Will Help Djibouti Grow its Economy and Improve Access to Services. (Accessed 5 September 2020).

[3] World Bank (2020). New $25 Million Support Will Help Djibouti Grow its Economy and Improve Access to Services. (Accessed 5 September 2020).

[4] New African (2020). Djibouti’s massive boom in transport infrastructure. (Accessed 5 September 2020).

Availability of data on housing finance

Djibouti does not have a well-established government agency that collects credible housing data. Most of the data used in this study were gleaned from a number of sources and most of the data was not necessarily collected for purposes of housing research.

The Central Bank of Djibouti has data on commercial banks, forex bureaus, and microfinance entities operating in Djibouti. However, unlike most central banks, the central bank has no data on the performance of the entities it regulates. Nonetheless, the World Bank Doing Business reports and other public reports are helpful sources of information. Further, the United Nations Development Programme (UNDP), World Food Programme (WFP), United Nations Children’s Fund (UNICEF), Food and Agriculture Organization (FAO), United NationsHabitatand International Monetary Fund (IMF)have a great deal of accurate data touching on their respective focus areas. Other sources of data include; Statista, Oxford Business Group, Numbeo, and TradingEconomics, among others.

Some of the challenges of getting data in Djibouti relate to the informality in which business is conducted in the country. Most transactions among Muslims are largely undocumented and rely on mutual trust. This may explain the absence of data on a number of parameters studied but this observation is subject to further empirical evidence.

Urban Informality

Djibouti has 42% of the population living in extreme poverty. Djibouti city, which hosts 33% of the population, has about 13 slums. As the International Organization for Migration (IOM) observes, the migrant population has found themselves stranded in Djibouti’s informal settlements located along the migration corridor, because of a lack of resources to proceed with their migration journey. According to IOM, informal settlements expose migrants to health risks because such settlements have little or no access to essential services.

The government is partnering with development partners such as World Bank and UN Habitat to upgrade the slums. According to UNDP, close to 50% of urban dwellers in Djibouti are connected to public water supply while the other 50% access water is connected to their neighbors or from public standpipes.

Djibouti has acute shortages of solid waste management facilities, especially in informal settlements. Approximately 17% of urban dwellers have no functional toilets and practice open defecation, while 83% of rural dwellers have no access to toilets or latrines. These practices significantly contribute to waterborne diseases and diarrhea, especially among women and children.

[1]Reliefweb (2020). Republic of Djibouti: COVID-19 Situation Report #3. 9 April 2020. UN Country Team in Djibouti (Accessed 28 August 2020).

[2] United Nations Djibouti (2020). 2020 COVID-19 Situation Report #6. 2 May. (Accessed 28 August 2020).

[3] Banque Centrale de Djibouti (2020). Actions and measures taken by the Central Bank in response to the COVID-19 pandemic in Djibouti. (Accessed 20 September 2020). Pg. 1.

Additional Sources


Central Bank of Djibouti

National investment Promotion Agency.

Statista. Djibouti

Myfinb. Djibouti


Djibouti Central Bank.

Food and Agriculture Organization:


Making Finance Work for Africa:


The Heritage Foundation:

The IntergovernmentalAuthority on Development (IGAD):

The World Bank: htpps: //

Trade Economics: htpps://


United Nations children’s Fund (UNICEF).

United Nations Human Rights Office of the High Commissioner:

World Population Review:

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