TODAY.AZ / Business

House rents decrease

03 May 2016 [11:25] - TODAY.AZ

/By Azernews/

By Gulgiz Dadashova

Residential rents are continuing to fall in many areas of Baku amid the ongoing drop in house prices, a consulting company said.

Over the past month prices for rental apartments dropped by 4.3 percent and compared to the previous year the figure fell by 13 percent, said Nusret Ibrahimov, CEO of consulting company MBA Group.

“Following the manat devolution in late 2015, many landlords have tried to raise the price of housing in the national currency, or to transfer it in the dollar equivalent, but bulk of them failed. Then, house rents in Azerbaijan, mainly in Baku decreased in terms of the national currency, the manat,” he said.

This trend will continue and wave-like price cuts will be seen until the end of summer, Ibrahimov believes.

The expert went on to say that the price of the apartments, which are rented to low-income families or students remained at the same level.

"Basically, residential rents dropped in price (for 2-5-room) in the center or relatively close to the city center. Strong decrease is seen in the price of expensive apartments. A year ago, one-bedroom apartment rented for 800-850 manats ($532-$565) in the city center, while today the figure is 400-500 manats ($266-$332). For two bedroom apartments, the figure was 1,300-1,500 manats ($864-$1,000) and now it stands at 700-800 manats ($465-$530), "the expert explained.

The most expensive luxury housing was previously offered for 10,000-12,000 manats ($6,647-$7.976), but now it costs 5,000 manats ($3,323). "The low-cost housing has changed in price, before it cost the tenants 150 manats ($100), and nothing cheaper can be found today,” he said.

Experts attribute the decline in prices to a moderation in demand due to the breach of affordability thresholds. The forecast for the capital’s residential market has deteriorated since the second devolution of the manat caused by the prolonged weakness in oil prices and impact it had on demand in the country’s commercial and residential sectors.

The number of transactions on the rental housing market in Baku increased by 4.6 percent in February 2016 compared to January, reaching 114, according to the MBA Group consulting company's report.

The average cost of residential rent in Baku amounted to $320 per month, which is four percent less than in January 2016.

In February, the average price of one-bedroom apartments increased by 1.6 percent compared to January and amounted to $192. The cost of renting two-bedroom apartment was $309 (two percent decrease), and three-bedroom was $417 (1.2 percent growth).

The volume of offers on the rental housing market in Baku increased by 9.4 percent. The number of proposals was 305 in January, while in February the number hit 333, which is by 20 percent more than the number of proposals in the same period of 2015.

Bulk of the offered residences was one and two bedroom apartments, the total share of which in February was 68.5 percent of the portfolio.

Most of the proposals in the rental market were recorded in Nasimi, Narimanov and Yasamal districts of Baku, which accounted for 68.9 percent of all proposals. Least number of proposals were registered in Khazar and Surakhani districts.

Overall, activity in the real estate market of Baku in January 2016 rose by five to six percent compared to last December.

The consultancy inked the growth of activity in the market with the changes taking place in the banking sector. "In view of recent events, some people decided to save money not in banks’ deposits, but invest in real estate,” the agency said.

URL: http://www.today.az/news/business/150345.html

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