Urban renewal is the way of remodeling older parts of urban areas, including their centralrnbusiness areas, by means of rehabilitation and conservation as well as redevelopment. InrnAddis Ababa, in addition to city beautification, with the demand of land for variousrndevelopment activities in core areas is high and the supply is limited.The aim of the study wasrnto investigate the challenges and prospects of urban renewal projects and relocation of peoplernon the socioeconomic impact of relocated people from Felege Yordanos area.rnBased on the result of this study, due to the relocation program, 64% of them faced bothrnmental and physical disorder, family disintegration especially children (31%) and the rest 18%rnhas been divorced. Almost all of the respondents were not happy for the relocation orientedrndevelopment. Further they have said that even if the development is very crucial for our bothrneconomic and social benefits, the development should be well planned and deep awarenessrncreation should be done before implementation.rnThe productive activity and business of relocateesâ€Ÿ were significantly affected due tornimproper settlement of peoples. Furthermore, major challenges associated with the Kirkos subrncity of Felege Yordanos area displaced people became far from proximity to jobs, customersrnand market places.Thus, it is better to develop the partial area of targeted area first and thenrnshifting the resident to the developed one and then developing the remaining area of the plan.