AZE.US
Rising housing prices, steady rental growth and relatively high deposit rates are reshaping investment calculations in Azerbaijan’s capital, particularly for private investors and expatriates considering relocation.
According to the Central Bank’s monetary policy review, rental prices in December 2025 were up 7.8% year-on-year. Over the same period, new-build apartment prices rose by 12.7%, while the secondary market recorded a 12.2% increase.
For investors, the comparison between rental yield and bank deposits is central. A one-room apartment in an older residential building in Baku costs on average around 100,000 manats. With monthly rents ranging between 300 and 400 manats, the gross annual rental return stands at roughly 3.6–4.8%.
By contrast, local banks currently offer deposit rates of 9–10% annually, potentially generating 9,000–10,000 manats in yearly interest from the same capital. On a purely cash-flow basis, deposits appear more attractive.
However, property investors factor in capital appreciation. Official data show that housing prices have increased by an average of 10–13% annually in recent years. If that trend continues, total returns from ownership may exceed fixed-income instruments, though with higher liquidity risk and market exposure.
For expatriates, the calculation differs. Renting offers flexibility and reduces upfront capital commitment, particularly for those on short- to medium-term assignments. Limited supply in certain districts of Baku, however, has made finding quality rental units more competitive.
Analysts note that cultural preference for homeownership remains strong among local buyers, supporting underlying demand even as prices climb.
With deposit yields elevated and real estate prices continuing to appreciate, the decision increasingly depends on investment horizon, mobility needs and risk appetite rather than a one-size-fits-all formula.