Saturation of property market can substantially reduce housing prices in Azerbaijan

Azerbaijan, Baku, Sept. 13 / Trend A.Akhundov /

Baku's real estate market observes greatest demand in cheap housing to 50,000 manat [regardless of whether it is the primary market or secondary], Baku Realtors Association head Elnur Azadob said today.

He said the number of housing under construction is very small on the backdrop of the population's strong demand for housing in Azerbaijan.

"About 30 percent of the current Baku was built from 1970 to 1990 and after the collapse of the Soviet Union was raised only about 500 buildings. This figure is minuscule," Azadov said.

According to him, neither construction company has vacant apartments at the stage of commissioning of the building.

"If we make an analysis of 100 construction sites in Baku, the construction is completed or is nearing completion.  Units apartments remain vacant and this indicates that demand is high enough. Many people are interested to sell their old property and buy an apartment in new buildings. Today, it is fashionable and prestige. Unfortunately, we now have a little new buildings," Azadov said.

He said it is necessary to create conditions for construction companies to build as much as possible.

"The more the market will be saturated in real estate, the sooner we will observe stabilization and reduction of prices in this area," Azadov said.

According to him, the slow pace of construction is linked with the reduced number of building permits in the city center.

"Reduction in building permits are issued for the construction in the inner part of the city. If we take statistics of the city mayor over the past ten years, most permits were issued from 2004 to 2007. After 2007, the issuance of building permits almost was ceased and not all citizens looking to purchase real estate on the outskirts of Baku," Azadov said.

Azadov said the most building permits were issued on the outskirts of the city - Absheron, Yasamal and Ahmadli.  "While not all persons interested in acquiring property in these areas," he said.

Average price per square meter in the primary real estate market of Baku was 866 manat in July, or four manat (0.4 percent) below the June figure. The price decrease was at 1.6 compared to the second quarter, at 3.5 percent since early 2010 and at 8.6 percent compared to the same period of 2009.  

In July, the secondary housing market of Baku observed decrease in the dynamics of bargaining at 2.5 percent. The share of new buildings in the housing market continues to grow  in Baku, and the figure was 60.9 percent in July. The secondary housing market showed an increase in the proportion of new buildings - 0.2 percent compared to June.

Baku Realtors' Association was registered in the Azerbaijani Justice Ministry registered the Association in October 2008. The membership fee for legal entities is 300 manat and  physical entities - 150 manat.

The association's main objectives are to define standards for the functioning of real estate activities in Azerbaijan, to establish the professional training center, and to introduce realtors' certification system

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