What is happening in the real estate market in Baku, February 2018
After two stunning, not in the best sense of the word, devaluations of 2015 and price fever in 2016 and 2017, the real estate market of Azerbaijan stabilized somewhat in 2018, the beginning of this process was laid back in 2017. And in some areas of the city in 2018, even a slight increase in prices.
Let's take a look at the situation in the real estate market in 2017.
The implementation of a pilot project to rebuild the 1st microdistrict and a number of other districts of Baku
According to the decision of the Cabinet of Ministers on measures to restructure the first and other neighborhoods in Baku on March 10, 2017, the functions of the customer for the reconstruction works to be carried out on the territory of the first microdistrict as a "pilot project" are entrusted to the Ministry of Emergency Situations on the basis of his proposal submitted in February 2016 year.
According to this project, the so-called "khrushchevka"s and block houses with the French florplans located in several microdistricts of Baku are scheduled for demolition; in the vacates territories will be built modern residential complexes, consisting of 9 and 12-storey buildings, as well as a number of social facilities (schools, kindergartens, etc.). Residents of these houses will be able to get housing in these new buildings under the guarantee of the state.
In addition, for the period from the demolition of old buildings to the completion of the construction of new complexes by construction companies, evicted from the demolished buildings, tenants are provided with payment of funds from the state for placement in rented apartments. Tenants of demolished buildings will be provided with apartments of 10 percent more than the total area of their old apartment. The same conditions apply to owners of non-residential premises located in the territories that fall under the reconstruction plan.
Construction of social housing began in Azerbaijan
Work in this direction began in 2016. In April, the State Agency for Housing Construction was created, and in December 2016, the foundation laying ceremony was held for the first nine-story building and school that are being built in the Yasamal residential complex, the first project of the State Agency.
Currently, MIDA LLC under the State Agency has already completed construction and installation works in the first 12 residential buildings of the complex and the building of the general education school for 960 places, today the finishing work continues. In parallel, the construction of other multi-apartment residential buildings is continuing, and works are also being carried out to provide the territory with appropriate engineering communications. In total Yasamal residential complex will consist of 29 multi-apartment residential buildings: 17 of them will be two-block and nine-storey, and 12 - one-block and 12-storey. 301 of 1854 apartments in these buildings will be one-room, 1110 - two-room, 443 - three-room. The area of one-room apartments will be 31 - 33 square meters, two-room apartments - 50 - 58 square meters, three-room apartments - about 70 square meters.
In addition, at the end of December 2017, the ceremony of laying the foundation of the first seven-story building was held, which will be built in the Hovsan residential complex - the second project of the State Agency. The town will consist of 11 multi-apartment residential buildings: seven of them will be seven-story with eighteen entrances, and four - ten-story with one entrance. It is planned that in all these buildings there will be 3002 apartments, of which 280 are single rooms, 1481 are two-room apartments, 940 are three-room apartments and 301 are four-room apartments. The area of one-room apartments will be approximately 32-35 square meters, two-room apartments - 51-54 square meters, three-room apartments - 64-68 square meters, and four-room apartments - 79-86 square meters. In the territory it is planned to hand over two kindergartens for 260 places each, a secondary school for 1920 pupils, a shopping center and a hospital. In addition, it is planned to create the appropriate transport infrastructure on the territory and integrate it into the urban public transport system.
More information about these projects and the activities of the State Agency as a whole can be found here.
Increased volumes of mortgage lending
In 2017, after the restructuring of its activities, the Azerbaijan Mortgage Fund (AMF) resumed active lending. The process of restructuring, which lasted throughout the year 2016, was reflected in the real estate market. If in 2016 the AMF issued only 188 loans for 33 million manat, then in 2017 the number of issued loans was 3,182, and the volume of loans increased to 232 million manat.
3 factors, described above, taken together had a significant impact on the stabilization of the real estate market. And further growth in the market can also be associated with the activity and volumes of implementation of these projects. It should be noted that the downward trend in the real estate market is gradually decreasing.
As for the forecasts for 2018 and the following years, provided a stable rate of manat against the US dollar, with moderate growth in supply and stimulation of the purchasing power of the population through mortgage lending, a slight increase in prices for residential real estate is possible before the end of the year.
