AZE.US
Rental prices in Baku remain high despite the large number of apartments that are reportedly standing empty.
Economist Rashad Hasanov said one of the main reasons is that many vacant properties never enter the rental market.
A significant share of these apartments belongs to higher-income owners who hold multiple properties. In many cases, the homes were purchased as investments or a way to preserve wealth rather than to generate rental income.
As a result, the apartments may be unoccupied, but they do not increase the supply available to tenants.
Another factor is the sharp rise in property prices in recent years. Hasanov said rental yields in Azerbaijan remain relatively low, creating a gap between the value of an apartment and the income it can generate.
Owners who bought homes at higher prices are therefore more likely to demand higher rents in an effort to recover their investment.
Mortgage costs have also increased significantly.
According to Hasanov, mortgage rates offered by commercial banks have more than doubled over the past two years. Rates are now around 12 percent, compared with roughly 6 percent about two and a half years ago.
Property owners who purchased homes with expensive loans often set higher rents to cover their monthly payments.
Demand also remains strong. Around 60,000 to 70,000 new families are formed in Azerbaijan each year, adding to the need for housing.
Migration from the regions to Baku and surrounding areas in search of employment is placing further pressure on the rental market.
This combination of limited supply, expensive mortgages, rising property values and steady demand is keeping rents high, even as thousands of apartments remain empty.
AZE.US