A 117-square-meter three-room apartment in Baku’s Narimanov district has been listed for 450,000 manats, prompting questions about how closely the capital’s housing prices reflect construction costs.
The apartment was featured in a television report about Baku real estate prices. The complex is not advertised as having a sea view or another specially noted panorama. The asking price is about 3,846 manats per square meter.
That figure is the seller’s asking price for one property. It is not a confirmed transaction price or an average for the district.
Construction Is Only Part of the Cost
Comparing the price of an apartment only with the cost of materials and construction labor leaves out other major expenses. Specialists in the report pointed especially to the price of land and the cost of clearing a development site.
Vacant plots suitable for apartment construction are becoming scarcer. Developers increasingly build on sites occupied by older homes. In those cases, the project budget may also include relocating residents and paying their rent and moving expenses while construction is under way.
Owners of demolished homes are also provided apartments in the new building. According to the practice described in the report, the replacement homes may be renovated and larger than the former properties. Those obligations affect the economics of the entire project.
An Asking Price Is Not a Sale Price
These expenses help explain why a finished apartment may cost much more than the materials and labor used to build it. They do not, however, prove that every asking price on the market is justified.
The 450,000-manat listing shows what one seller expects to receive. Assessing whether it is reasonable requires comparison with similar properties, taking account of location, the apartment’s condition and the characteristics of the building.
A single advertisement cannot establish the price of housing across Baku. Confirmed sales and comparable listings are needed before drawing broader conclusions about the market.
Source: Vesti Baku. The television report is available on YouTube.