Land speculation that occurs on the urban border can be very problematic to the healthy development of cities—critical to economic growth. Speculative land investors, concerned with profits from trading in landed property, can especially affect developing countries where regulation is often poorly controlled and overly bureaucratic. An investigation into the factors motivating land speculators operating in the urban fringe of the city of Shashemene, Ethiopia is examined. The paper, in addition to contributing to the literature, is the second-known attempt and extension of the authors’ pilot research to study the behavior of land speculators in the urban fringe of a growing Ethiopian city. A theoretical framework and conceptual breakdown are put together with historical reference to early land speculation examples. Two questionnaires were separately administered with a representative random sample of 159 members from the local land developer association (i.e., investors) and 24 senior officials from the study area. A principal component analysis categorized the most significant dynamics in controlling land speculation procurements. Results indicated motivational reasoning as the prime cause for speculative activities. Evidence indicated that land speculation is a critical dynamic for self-worth especially with business-oriented persons. Entropy, the disorder of the communicative data, suggests a possible rethinking of the way government should intervene in the urban property market. As such, developmental smart cities in Ethiopia must thoroughly consider the dynamisms of speculative activities and its effects on local housing as it moves forward–in the 2020s.

This article is intended to examine the nature of urban expansion and development from a land speculation and urban sprawl perspective. Survey and case study approach were used to achieve this aim. As urban territory extends into adjacent periurban areas, speculators keep their land out of the current market so that developers of land and buildings must bypass it and home buyers should travel further distance to buy new lands and houses. This extra distance creates additional costs by increasing the cost of development, operation and travel. The finding of this article concludes that the speculators who held their land out off the market and received an average land value increase of about $230 per m2 each year generated extra social costs which they did not pay about $1,810 per m2 each year.

The high demand for land provides land speculators the opportunity to hold land in anticipation of a price increase over time. Although the objective of the 1991 Land Use Statement was to test extra land speculation, the announcement has only been successful in fueling it. This study examines the role of land speculators around the outer edge of Shashemene’s metropolitan area. Primary data for this study was collected through a questionnaire with 73 respondents who were sampled using snowball sampling techniques. The chief findings of this study reveal that land speculation is still practiced in the study area, and the respondents affirmed they engage in speculation mostly for economic benefits.