AZE.US
A noticeable decline in apartment prices is not expected in Azerbaijan in the near future, even as sellers report difficulty finding buyers and many households say housing has become unaffordable.
Vugar Oruj, chairman of the Azerbaijan Society of Appraisers, told Globalinfo.az that the continued rise in real estate prices reflects broader economic trends rather than a temporary market imbalance.
According to Oruj, property has become one of the country’s most attractive investment options. Both businesses and individuals increasingly direct their available funds into apartments, houses and land.
Although demand and the number of transactions have declined compared with previous periods, the investment appeal of real estate continues to prevent prices from falling.
One of the main factors is the rising cost of construction. Building materials, labor and land have all become more expensive, while the limited availability of land, particularly in Baku, is pushing project costs even higher.
Stricter construction regulations are also contributing to higher prices. The introduction of modern standards, stronger safety requirements and tighter oversight of building procedures have increased developers’ expenses.
Oruj said another major factor was the lack of sufficiently attractive alternatives for investors. As long as real estate remains the preferred destination for savings and business capital, investment demand will continue to support prices.
Inflation, the purchasing power of the Azerbaijani manat and the overall level of economic activity are also influencing the market.
The implementation of Baku’s General Plan through 2040 is expected to create additional pressure. Residents displaced by the demolition of unsafe or outdated buildings will enter the market in search of replacement housing.
At the same time, new residential buildings constructed on cleared sites are likely to be more expensive because of high land and construction costs.
Oruj said the upward trend was expected to continue through the end of 2026 and into 2027, even if the number of property transactions falls.
Interest in real estate has strengthened since the COVID-19 pandemic, when property was widely viewed as a relatively reliable way to protect savings and generate rental income.
The expert added that the increase in real estate prices may appear less significant after inflation is taken into account. However, the market generally focuses on nominal values.
For example, if an apartment previously valued at 100,000 manats is later offered for 120,000 manats, the market records a 20% increase, even though part of that rise may reflect inflation and the declining value of money over time.
AZE.US