In the last few decades, the Ethiopian urban centers have experienced very fast rates ofrnurban growth. This rapid urbanization has resulted in the horizontal expansion of theserncenters towards rural areas. This expansion is at the expense of prime agricultural landsrnand has affected the livelihoods of farming communities dwelling in the urban fringes.rnCommunities and individual households have been displaced from their lands to give wayrnfor economic development interventions. The main objective of the study is thus to assessrnthe major prospects and challenges that the development of real estates has on ruralrnlivelihoods. A structured questionnaire was prepared and eighty household heads werernrandomly selected from the displaced households and filled the questionnaires.rnMoreover, data was also collected through focus group discussions and key personrninterviews. The findings of the study showed that the participation of the community inrnthe planning and implementation of the program was negligible. Moreover, thernhousehold vulnerability of the affected households had increased after theirrndisplacement. The establishment of the real estate also mainly negatively affected thernlivelihoods of the households as reductions occurred in their access to land and numberrnof livestock possessed. Meanwhile, the real estate also contributed to the betterment ofrnthe people 's livelihoods as it created employment opportunities and increased theirrnaccess to basic infrastructure. Different livelihood strategies were employed by therndisplaced households to cope with the changes in their livelihoods. Capacity building,rnskill trainings, micro-credit services and helping the community to build their own housesrnwere also identified as areas in which development actors can intervene to support thernaffected households.