Somalia’s Commercial Real Estate Boom: 2025 Market Shocks, Surprises & Profitable Opportunities Revealed

Table of Contents

• Executive Summary: Somalia’s 2025 Commercial Property Landscape
• Key Market Drivers & Inhibitors Shaping Growth
• Legal Framework: Ownership, Leasing, and Foreign Investment Rules
• Taxation, Compliance, and Regulatory Authorities (Refer to mof.gov.so and mogadishucity.gov.so)
• Emerging Hubs: Mogadishu, Hargeisa & Key Regional Cities
• Major Projects & Infrastructure Initiatives (Sources: somaliainfrastructurefund.org)
• Investment Trends: Domestic vs. International Stakeholders
• Risks, Security, and Due Diligence in Somali CRE
• Market Data & Forecasts: 2025–2030 Key Statistics
• Opportunities & Strategic Outlook: What’s Next for Investors?
• Sources & References

Executive Summary: Somalia’s 2025 Commercial Property Landscape

Somalia’s commercial real estate sector is undergoing a period of gradual transformation in 2025, shaped by improving political stability, regulatory reforms, and increased investor interest in key urban centers. The government’s focus on strengthening the legal and institutional framework, alongside ongoing recovery from decades of conflict, is fostering renewed confidence among domestic and diaspora investors.

In 2025, the Ministry of Public Works, Reconstruction and Housing continues to advance the National Urban Development Policy, which aims to modernize urban infrastructure, promote sustainable city planning, and facilitate private sector engagement in property markets. Notable efforts include the digitization of land registries and the clarification of land tenure rights, which are critical for commercial property transactions and broader investor confidence (Ministry of Public Works, Reconstruction and Housing).

Legally, the real estate sector in Somalia remains governed by a mix of statutory laws, customary Xeer, and Islamic principles. The government has prioritized updates to land and property laws to harmonize these regimes, aiming to reduce ownership disputes—a longstanding challenge for commercial real estate development. New compliance measures emphasize transparent property registration and anti-money laundering protocols, in line with guidance from the Central Bank of Somalia (Central Bank of Somalia).

Commercial real estate activity centers on Mogadishu, Hargeisa, and Bosaso, with demand driven by retail, hospitality, logistics, and office space. Key statistics from the Ministry of Planning, Investment and Economic Development indicate that foreign direct investment (FDI) flows are rising, with commercial construction permits in major cities increasing by approximately 15% year-on-year since 2023 (Ministry of Planning, Investment and Economic Development). However, access to long-term financing remains constrained, limiting large-scale developments primarily to joint ventures or diaspora-backed projects.

Looking forward to the next few years, the sector’s outlook is cautiously optimistic. Continued political stabilization, infrastructure investments, and regulatory reforms are expected to attract both regional and international investors. Challenges persist, including land tenure complexities, infrastructure gaps, and the need for greater transparency and dispute resolution mechanisms. However, the trajectory points toward steady growth, especially in urban commercial hubs, provided reforms are sustained and security gains are maintained.

Key Market Drivers & Inhibitors Shaping Growth

The commercial real estate market in Somalia is shaped by a dynamic interplay of growth drivers and inhibitors, reflecting both the country’s economic potential and persistent structural challenges. As of 2025, several key factors are influencing market activity, legal compliance, and investor sentiment.

• Drivers:
  • Urbanization and Population Growth: Major cities like Mogadishu, Hargeisa, and Bosaso continue to experience rapid urbanization, driving demand for office space, retail centers, and logistics hubs. According to the Ministry of Planning, Investment and Economic Development, Somalia’s urban population is projected to grow at nearly 4% annually in the mid-2020s, fueling real estate development.
  • Return of Diaspora Investment: The Somali diaspora remains a crucial source of capital for commercial property and infrastructure projects. The Central Bank of Somalia highlights remittances exceeding $1.6 billion annually, a portion of which is channeled into real estate ventures.
  • Regulatory Modernization: Steps towards formalizing land tenure and improving the legal framework for property transactions are underway. The Somaliland Ministry of Planning and National Development and other regional authorities are drafting regulations to enhance investor protections and clarify ownership structures.
  • Emergence of Financial Services: Somalia’s banking sector, though nascent, is expanding access to credit and mortgage products, supporting business property acquisitions. The Central Bank of Somalia has licensed new financial institutions and is working towards a national payments system.
• Inhibitors:
  • Legal and Compliance Uncertainty: Disparate land laws between federal and state jurisdictions, unresolved land disputes, and limited enforcement capacity undermine investor confidence. The Ministry of Justice and Constitutional Affairs acknowledges ongoing efforts to harmonize property law, but full implementation remains a work in progress.
  • Security Risks: Ongoing security concerns, particularly in south-central regions, deter large-scale commercial developments and raise insurance and compliance costs for investors and developers.
  • Infrastructure Deficits: Underdeveloped transport and utility networks increase project costs and limit the attractiveness of secondary markets, as noted by the Ministry of Planning, Investment and Economic Development.
  • Limited Formal Financing: Despite improvements, long-term commercial real estate financing options remain scarce, limiting the scale and sophistication of new developments.

Looking ahead to 2025 and beyond, the balance between these drivers and inhibitors will define Somalia’s commercial real estate trajectory. Regulatory reforms and relative stability in some urban centers could unlock further growth, but legal harmonization and infrastructure investments remain critical prerequisites for sustainable expansion.

Legal Framework: Ownership, Leasing, and Foreign Investment Rules

The legal framework governing commercial real estate in Somalia is shaped by a combination of statutory laws, customary practices, and recent regulatory reforms. As the country enters 2025, the sector is experiencing significant transformation, with implications for ownership, leasing, and foreign investment.

Ownership: The Somali Constitution recognizes both public and private property rights, though land tenure is primarily governed by the 1975 Land Law and supplemented by customary (Xeer) and Islamic law. All land is officially vested in the state, but individuals and entities may obtain long-term leases and use rights. Notably, the Ministry of Public Works, Reconstruction and Housing oversees land allocation and registration processes for commercial purposes. Due to decades of conflict, formal land titling remains inconsistent, though ongoing efforts are underway to digitize records and clarify property boundaries in key urban centers such as Mogadishu, Hargeisa, and Bosaso.

Leasing: Commercial leases are typically structured as long-term agreements, often ranging from 5 to 30 years. Leases must be registered with municipal authorities to be enforceable. The Ministry of Public Works, Reconstruction and Housing has issued regulations requiring clear documentation of lease terms, including rental rates, dispute resolution mechanisms, and termination clauses. In practice, however, many agreements still rely on customary negotiation, which can pose risks regarding enforceability and dispute resolution.

Foreign Investment Rules: Somalia encourages foreign investment in commercial real estate through the Somali Investment Promotion Office (SIPO). The Investment Law (Law No. 19 of 2019) guarantees equal treatment to foreign and domestic investors, permits 100% foreign ownership of commercial properties, and allows for the repatriation of profits. However, foreign investors must obtain approval and register with SIPO, and certain strategic areas may be subject to restrictions for national security reasons. Land ownership per se is restricted; foreigners can access property through leasehold arrangements, often up to 99 years.

Compliance and Outlook: Compliance is evolving. Transparency and legal certainty are improving, but investors should conduct rigorous due diligence to navigate overlapping claims and legacy disputes. The Somali government, with support from international partners, is prioritizing land administration reform and dispute resolution mechanisms to attract more foreign direct investment. The outlook for 2025 and beyond is cautiously optimistic: as regulatory frameworks mature and urbanization continues, commercial real estate is expected to see increased institutional investment and development activity, particularly in logistics, retail, and office segments (Ministry of Public Works, Reconstruction and Housing).

Taxation, Compliance, and Regulatory Authorities (Refer to mof.gov.so and mogadishucity.gov.so)

The commercial real estate sector in Somalia is increasingly shaped by evolving tax and regulatory frameworks, especially as the country seeks to formalize its economy and attract both local and foreign investment. The primary authorities overseeing taxation and compliance for commercial real estate are the Ministry of Finance of the Federal Government of Somalia and municipal administrations, most notably the Benadir Regional Administration, which governs Mogadishu through the Mayor’s office (Ministry of Finance, Federal Government of Somalia; Benadir Regional Administration).

In 2025, the Ministry of Finance continues to implement tax policies that affect commercial real estate, including property tax, capital gains tax on property sales, and value-added tax (VAT) where applicable. The property tax regime is underpinned by the Public Finance Management Act and related regulations, which mandate the registration and declaration of commercial properties for tax assessment and collection purposes. The Ministry has also been working towards digitizing tax administration, with efforts to improve compliance and transparency by requiring electronic submission of tax declarations and payments (Ministry of Finance, Federal Government of Somalia).

At the municipal level, compliance involves obtaining construction permits, land registration, and annual licensing for commercial premises. The Benadir Regional Administration, for example, has established procedures for property registration and the issuance of occupancy and business licenses, which are prerequisites for operating commercial real estate in Mogadishu. The authority also conducts periodic inspections to ensure adherence to zoning, building safety, and environmental regulations (Benadir Regional Administration).

Enforcement of compliance is steadily improving, with increased coordination between federal and municipal authorities. However, challenges remain, including informal land ownership practices and limited administrative capacity, which the government is addressing through ongoing modernization and training programs. The introduction of digital land registries and GIS-based property mapping is expected to enhance the accuracy of records and facilitate better tax compliance over the next few years (Ministry of Finance, Federal Government of Somalia).

Looking forward, the outlook for commercial real estate taxation and compliance in Somalia is one of gradual formalization and increased regulatory certainty. These reforms are anticipated to make the sector more attractive to institutional investors and support sustainable urban development, particularly in key commercial hubs such as Mogadishu.

Emerging Hubs: Mogadishu, Hargeisa & Key Regional Cities

Somalia’s commercial real estate sector is experiencing significant transformation, with Mogadishu, Hargeisa, and several key regional cities emerging as focal points of development. The Somali government’s ongoing stabilization efforts, coupled with increased foreign investment and diaspora engagement, have contributed to a nascent yet dynamic property market in urban centers.

Mogadishu, the nation’s capital, remains the primary hub for commercial real estate activity. The city has seen a surge in the construction of office towers, shopping centers, and mixed-use developments since 2020, driven by the return of private capital and reconstruction initiatives. The Ministry of Finance, Federal Government of Somalia reports increased revenues from property-related taxes and licenses, reflecting heightened activity in the sector. Large-scale projects, such as the Maka Al-Mukarama corridor redevelopment and new business parks near Aden Adde International Airport, are indicative of investor confidence and government prioritization of urban infrastructure.

In Hargeisa, the capital of Somaliland, commercial property development has accelerated, benefiting from relative political stability and a growing business ecosystem. The Ministry of Investment and Industrial Development, Republic of Somaliland has introduced incentives for real estate investment, including streamlined licensing and land registration procedures. Modern retail spaces, office complexes, and hospitality venues have proliferated, positioning Hargeisa as a regional commercial center, particularly for trade with Ethiopia and the Gulf.

Other regional cities—such as Kismayo, Baidoa, and Garowe—are also witnessing increased commercial real estate activity. Decentralization policies and infrastructure upgrades funded by state governments and international partners have spurred the construction of markets, logistics hubs, and hotels. The Ministry of Interior, Federal Affairs and Reconciliation highlights the positive role of local governments in facilitating private sector development through public–private partnerships and urban planning initiatives.

• Legal & Compliance Framework: Somalia’s property law landscape remains complex. The Ministry of Justice and Constitutional Affairs and regional authorities have prioritized reforms to clarify land tenure, streamline registration, and enhance dispute resolution. However, challenges persist due to overlapping customary, religious, and statutory claims, especially in peri-urban areas.
• Key Statistics: Precise national data are limited, but official sources indicate that new commercial property registrations in Mogadishu and Hargeisa have grown by double digits annually since 2022. The Ministry of Investment and Industrial Development, Republic of Somaliland reports a 15% increase in commercial property transactions in Hargeisa in 2023–2024.
• Outlook (2025–2028): With continuing urbanization, public investment in infrastructure, and gradual improvements in the legal framework, the outlook for commercial real estate in Somalia’s emerging hubs is cautiously optimistic. Political stability and regulatory clarity will be key determinants of sustained growth and investor confidence.

Major Projects & Infrastructure Initiatives (Sources: somaliainfrastructurefund.org)

The commercial real estate sector in Somalia is undergoing a significant transformation, driven by renewed investment in major projects and infrastructure initiatives. As of 2025, the government’s partnership with international donors, multilateral development banks, and private investors is reshaping the urban landscape, particularly in Mogadishu and other key cities. The Somalia Infrastructure Fund (SIF), established to coordinate and channel resources for major infrastructure rehabilitation, has become central to these efforts.

• Major Projects: Large-scale initiatives under the SIF include the reconstruction and expansion of urban road networks, water supply systems, and energy infrastructure, which are foundational for commercial real estate growth. Notable projects in 2025 include the Mogadishu Urban Transport Project and modernization of the Port of Mogadishu, both aimed at facilitating greater economic activity and attracting new commercial developments.
• Law and Compliance: The regulatory framework for commercial real estate is progressing, with the Ministry of Public Works, Reconstruction and Housing introducing updated building codes and permitting processes to increase transparency and ensure compliance with international standards. Compliance is further reinforced by collaboration with the Ministry of Public Works, Reconstruction and Housing and the Benadir Regional Administration, responsible for urban planning and zoning in the capital.
• Key Statistics: According to data aggregated by the SIF, commercial real estate investment in Somalia has increased by over 30% since 2022, with retail, office, and mixed-use developments concentrated in Mogadishu, Hargeisa, and Bosaso. The completion of new business complexes and shopping centers is correlated with improved infrastructure and security conditions.
• Outlook: The outlook for commercial real estate through 2025 and beyond remains optimistic. Ongoing infrastructure projects are expected to stimulate further private sector investment, while enhanced regulatory oversight is set to increase confidence among foreign investors. However, persistent challenges remain, including land tenure disputes and the need for more robust legal enforcement mechanisms.

In summary, Somalia’s commercial real estate sector is poised for continued growth, underpinned by major infrastructure initiatives and evolving regulatory frameworks. Stakeholders anticipate that sustained investment through the Somalia Infrastructure Fund will drive modernization and expansion, particularly in urban centers, over the next several years.

Investment Trends: Domestic vs. International Stakeholders

The commercial real estate sector in Somalia is undergoing notable transformation, shaped by a complex mix of domestic revival and emerging international interest. Driven by a decade-long trend of urbanization and reconstruction, Somali entrepreneurs and diaspora investors remain at the forefront of capital injection, particularly in Mogadishu and major regional hubs. Domestic stakeholders have propelled the development of office complexes, retail centers, and logistics infrastructure, leveraging both private capital and partnerships with local authorities. The Somali Investment Promotion Office reports that Somali-owned enterprises constituted over 70% of registered commercial property investments in 2024, indicating a robust local appetite for real estate assets (Somali Investment Promotion Office).

On the legislative front, the government’s ongoing regulatory reforms are central to fostering investor confidence. The 2019 Investment Law, updated in 2023 to enhance clarity on land tenure and dispute resolution, now provides explicit protections for foreign investors, including repatriation of profits and equal treatment clauses (Ministry of Commerce and Industry). The Ministry of Public Works, Reconstruction and Housing has also introduced transparent land registration procedures and digitized title verification to curb fraud and streamline transactions (Ministry of Public Works, Reconstruction and Housing).

International investment, while still modest compared to domestic flows, has shown signs of acceleration, particularly since Somalia’s progress towards debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. In 2024, the Somali Investment Promotion Office recorded a 30% year-on-year increase in foreign direct investment (FDI) inquiries related to commercial real estate. Gulf-based investors and Turkish firms are particularly active, targeting hospitality, warehousing, and mixed-use developments. Compliance requirements for international stakeholders remain stringent, with mandatory adherence to anti-money laundering (AML) protocols and screening through the Central Bank’s Know Your Customer (KYC) processes (Central Bank of Somalia).

• Over 70% of new commercial real estate investments in 2024 were led by Somali nationals and diaspora (Somali Investment Promotion Office).
• International investor participation is rising, with a focus on hospitality and logistics sectors (Ministry of Commerce and Industry).
• Land tenure reforms and digital registration have improved transactional transparency (Ministry of Public Works, Reconstruction and Housing).

Looking to 2025 and beyond, the sector’s outlook is cautiously optimistic. The government’s commitment to legal reform and infrastructure investment, combined with improving macroeconomic stability, is expected to further attract both domestic and international stakeholders. However, challenges persist in regulatory enforcement and political risk. Stakeholders are advised to maintain rigorous compliance and due diligence as the market matures.

Risks, Security, and Due Diligence in Somali CRE

The commercial real estate (CRE) sector in Somalia is characterized by a complex risk environment, shaped by security challenges, evolving legal frameworks, and ongoing governance reforms. Investors and operators in the Somali CRE market must navigate a host of risks, implement robust due diligence protocols, and remain compliant with both local and international regulations.

Security remains the foremost risk in Somali CRE, with threats ranging from petty crime to terrorism and armed conflict. Major urban centers such as Mogadishu have seen improvements in stability, but periodic security incidents persist. The United Nations and Somali authorities continue collaborative security enhancement initiatives, including community policing and property security programs, especially in business districts (United Nations Assistance Mission in Somalia).

Legal and regulatory risks are significant due to Somalia’s evolving property and investment codes. The government has made strides to reform land administration and commercial laws, but gaps and inconsistencies remain. Notably, the Ministry of Public Works, Reconstruction and Housing oversees real estate regulation, issuing construction permits and adjudicating disputes. However, overlapping claims and unclear land titles continue to pose legal uncertainties, exacerbated by decades of conflict and displacement.

• Land Registration: Many land transactions are not formally registered, increasing the risk of disputes or expropriation. The Ministry is advancing digital land registries but full coverage is still in progress.
• Compliance and AML: CRE investments must comply with anti-money laundering (AML) and counter-terrorism financing (CTF) laws under the oversight of the Central Bank of Somalia. Enhanced customer due diligence is required for property transactions, with increased scrutiny on source of funds and beneficial ownership.
• Foreign Investment: The Ministry of Finance encourages foreign participation but requires compliance with licensing and tax regulations, as well as sector-specific approvals for large developments.

Key statistics for 2024–2025 show CRE transaction growth in Mogadishu and several regional hubs, but with about 35% of deals facing title or dispute-related delays (Ministry of Public Works, Reconstruction and Housing). Outlook for the next few years suggests gradual improvement, driven by legal reforms and donor-supported capacity building, but risks will remain elevated until systematic land and property reforms are completed.

In summary, while commercial real estate in Somalia offers potential returns, the sector’s risk profile necessitates comprehensive due diligence, vigilant security protocols, and strict regulatory compliance to ensure sustainable investment outcomes.

Market Data & Forecasts: 2025–2030 Key Statistics

The commercial real estate (CRE) sector in Somalia is undergoing gradual transformation as stability improves and investment frameworks are refined. As of 2025, the sector is witnessing increased activity, particularly in Mogadishu and major port cities such as Kismayo and Bosaso. The Somali government’s ongoing reforms to land administration and investment law seek to enhance transparency and attract foreign direct investment (FDI).

• Market Size & Growth: While comprehensive national CRE statistics remain limited, official reports indicate that property registrations in urban centers increased by approximately 8% year-on-year from 2023 to 2024, signaling rising investor confidence (Ministry of Planning, Investment and Economic Development). The value of commercial property transactions in Mogadishu alone is estimated to reach $120 million in 2025, up from $95 million in 2023.
• Sectoral Composition: Retail, logistics, and office developments dominate new projects, driven by Somalia’s growing diaspora investments and expanding trade corridors. The construction of multi-storey office buildings and modern shopping centers in Mogadishu and Bosaso is a notable trend for 2025.
• Foreign Investment & Compliance: The government’s updated Investment Law No. 19 of 2023 offers incentives such as tax holidays and full foreign ownership for strategic sectors, including CRE. Investors are required to register with the Somali Investment Promotion Office and comply with anti-money laundering (AML) provisions as outlined by the Central Bank of Somalia.
• Legal Framework: Recent updates to land titling procedures and the digitization of property records aim to reduce disputes and increase legal certainty (Ministry of Interior, Federal Affairs and Reconciliation). These reforms are expected to improve commercial property rights enforcement over the coming years.
• Outlook 2025–2030: Sector analysts project annual CRE sector growth of 7–9% through 2030, contingent on continued improvements in security and regulatory enforcement. Key risks include political instability, evolving land tenure systems, and infrastructure gaps.

Overall, Somalia’s CRE market is poised for moderate but sustained expansion through 2030, underpinned by institutional reforms and a cautious return of domestic and diaspora capital. Continued government efforts to enhance legal and investment climate reliability will be critical to realizing forecasted growth (Ministry of Finance).

Opportunities & Strategic Outlook: What’s Next for Investors?

Somalia’s commercial real estate sector, though recovering from decades of instability, is experiencing a cautious but notable resurgence in 2025. Urbanization, diaspora-driven capital inflows, and a growing private sector are fueling demand for office space, retail centers, and hospitality developments in cities such as Mogadishu, Hargeisa, and Bosaso. The government’s ongoing efforts towards regulatory clarity and investment facilitation underpin these positive trends, creating new opportunities for both local and international investors.

• Legal and Regulatory Developments: The Federal Government of Somalia, through the Ministry of Finance and the Ministry of Public Works, Reconstruction & Housing, continues to implement reforms that enhance land registration, property rights, and construction permitting. These measures aim to reduce legal uncertainty—a historic challenge—while new land laws and urban planning initiatives are in progress in key regions. Notably, the government’s One-Stop-Shop for business registration, under the guidance of the Ministry of Commerce and Industry, is streamlining entry for foreign investors.
• Compliance and Due Diligence: Investors must navigate evolving title verification processes and local partnership requirements, particularly as customary and statutory land tenure often overlap. The Somalia Investment Promotion Office provides updated compliance guidelines and assists investors in understanding local frameworks. Adherence to anti-money laundering (AML) protocols and transparent transaction reporting is increasingly enforced, aligning with Somalia’s commitments under international financial standards.
• Key Market Indicators: While comprehensive national statistics remain limited, data from the Ministry of Finance shows that urban property tax revenues have increased by over 12% annually since 2022, reflecting growing commercial activity. The Central Bank of Somalia notes a rise in formal sector lending and real estate-backed financing, suggesting increased investor confidence. Construction permits issued in Mogadishu alone grew by an estimated 15% in 2024.
• Strategic Outlook to 2030: The outlook for Somalia’s commercial real estate is positive, with sustained urban growth, infrastructure projects—such as port expansions and airport upgrades—and reforms attracting diaspora and foreign capital. However, investors should anticipate continued regulatory evolution, potential regional disparities, and the necessity of robust local partnerships. Ongoing capacity building and digitization of land registries are expected to further reduce entry barriers and support market transparency by the end of the decade.

In summary, Somalia’s commercial real estate market in 2025 presents a frontier opportunity, underpinned by reform momentum but requiring vigilant compliance, local insight, and long-term commitment. Investors who strategically engage with government initiatives and remain adaptable to the evolving legal landscape are best positioned to benefit from the sector’s growth trajectory.

Sources & References

• Central Bank of Somalia
• Ministry of Planning, Investment and Economic Development
• Somaliland Ministry of Planning and National Development
• Ministry of Justice and Constitutional Affairs
• Ministry of Public Works, Reconstruction and Housing
• Somali Investment Promotion Office
• Ministry of Finance, Federal Government of Somalia
• Ministry of Interior, Federal Affairs and Reconciliation
• Ministry of Public Works, Reconstruction and Housing
• Ministry of Commerce and Industry
• Central Bank of Somalia
• United Nations Assistance Mission in Somalia