The main purpose of the study was to assess the opportunities and challenges of urbanrndevelopment housing policy and residential real estate development in Addis Ababa.rnMixed research method, that is both quantitative and qualitative research methods, wasrnemployed in the study. Moreover, a case study was used in tentionally to deeplyrninvestigate the overall condition of residential real estate development in the city ofrnAddis Ababa. To achieve the purpose, two residential real estates i.e., Ayat and Sunshinernreal estates were selected for the case study. These residential real estates were selectedrnby using purposive sampling in order to include the most experienced developers whichrnstarted construction earlier and transferred houses for clients. The residents were selectedrnusing propoltionate stratified and systematic sampling techniques. The stratified samplingrnwas taken by considering the housing typologies i. e. Villa and Apartment types. Thernstudy employed questionnaire, interview, observation, and document review as tools ofrndata collection.rnThe resu lt of the study shows that the Addis Ababa housing policy could be considered asrntargeted policy in its strategy, aiming at provision of houses for all sections of the society.rnThe housing development agency has been stri ving to meet its goals despite the emergingrnchallenges. The policy allows individuals, cooperatives, real estates, NGOs, andrngovernmental organizations to construct houses with different market prices in order tornalleviate the existing shelter problem in the city. Accordingly, 125 residential real estaterndevelopers involved themselves in the production of houses. However, the finding showsrnthat only few residential real estates were active developers, focusing predominantly onrnhigh income groups in the city. Even though they have been producing houses and creating job opportunities, particularly for the poor people of the society, majority of thernreal estate developers misused the plots. For instance, they have used the land asrncollateral for loans from banks. It was also discovered that they have never startedrnconstruction on the land they took on time and that they have even transferred the plot torna third party without the consent of the city administration. Ap31t from this, they havernbeen reported to construct houses illegally. On the other hand, it was found that thernresidential real estate developers have faced challenges like limited supply and high pricern.. t of land, low availability and high cost of construction materials, low availability ofrnfinance as well as infrastructure, and service problems.rnBased on the findings, it was recommended that the City Government of Addis Ababarnshould control the overall activities of the developers in line with the objectives of UrbanrnDevelopment Housing Policy of the city in order to keep the contribution of residentialrnreal estates in producing decent houses. Besides, it is essential for the city administrationrnto formulate a comprehensive viable policy and strategies regarding real estaterndevelopment as well as housing. The policy then would become involved in the processrnof creating well planned, defined and splendid built up environment of Addis Ababa.