Azerbaijan, Baku, Feb. 28 / Trend U.Ismayilova /
Rising prices for food products in Azerbaijan [due to global processes] can lead to lower prices on the real estate market, the world expert in the field of real estate appraisal, senior certified trainer of the International Real Property Foundation, George Badescu, said.
Badescu is in a visit to Baku to carry out the practical-theoretical training "Basic principles and procedures for assessment of real estate" organized for Azerbaijani appraisers. Training is conducted jointly with the Azerbaijani Society of Appraisers, the International Real Estate Fund and the International Finance Corporation. Training will be continued from Feb. 28 to March 4.
"This trend is explained by the fact that people are not interested to invest in real estate given high prices for products," Badescu said.
Today, a problem of constant rise in prices in Azerbaijan could be one of the types of risks to the real estate market.
Referring to the global financial crisis's impact on the real estate market of Azerbaijan, Badescu said the crisis in first impacted the financing of the market due to a restriction of credit investments by banks and mortgage lending.
In times of global crisis and after, the banks in the world markets have suspended the activities of mortgage and other activities related to real estate.
"This has seriously affected the real estate market of Azerbaijan, as sale and purchase transactions on the real estate held mainly through banks," Badescu said.
He believes, to ensure the growth of the real estate market, the government should support the local banking system, require mandatory mortgage insurance and provide additional funds for mortgage lending, as well as encourage banks to ensure that they have lowered interest rates.
"This practice has been used in many countries," Badescu said.
The real estate market of the developing countries, which are partially dependent on imports, also depends on the situation in the exporting countries, he added. This is yet another risk to the real estate market.
The level of risk is a major obstacle to attracting investors, as well as, at existence of high risk, investors require a return on investment for the short term that is unprofitable for local companies. Also there is a difference between local and foreign investors, as local investors assess the risks less than foreign ones.
"In a particular case, market transparency is important, in terms of market information, transactions and other processes," Badescu said.
Badescu said low awareness about the market says investors about the high level of risk. There are three types of disseminating information about the real estate market in world practice: first - it is a national cadastre and registry, second - information specialist companies who receive information and sell it to customers, and third - it is specifically the base of real estate appraisal companies.
"By the way, creating separate companies to collect information about the state of the real estate market is a very profitable business, which may be beneficial in Azerbaijan. The establishment of such companies also has a positive impact on ensuring the transparency of the market," Badescu said.
Referring to awareness of the foreign investors about the state of the real estate market of Azerbaijan, the expert said that the information published by the Azerbaijani market is not enough. No information in English, French and other languages, available to foreigners.
"Real estate market in Azerbaijan is not transparent enough, but I think that over time market information is more readily available," Badescu said.