Real estate prices to decrease in Azerbaijan

/By AzerNews/

By Aynur Karimova

Every family dreams of owning their own home. For a young family, buying an apartment or a house is especially important, but many lack the initial capital to make that dream come true. In this case, it is common for many young families to turn to bank loans to meet their needs.

Rashad Aliyev, a representative of the Value and Sources Consulting Company, recommends that those who wish to borrow a mortgage loan wait for more favorable conditions.

"There is a strong probability that this year Azerbaijan's real estate market will reach the minimum price indices. According to experts' most pessimistic forecasts, prices could drop by 15 percent. In any case, this year the cost of the real estate will drop in comparison with previous years," he told local media.

In Azerbaijan, the maximum amount for mortgage loans provided via the Azerbaijan Mortgage Fund is 50,000 manats with a rate of eight percent and maturity term of 25 years. The “social mortgage loan”, however, is issued in the amount of 50,000 manats with an annual rate of four percent and for a term of 30 years.

The initial payment to receive the social mortgage stands at 15 percent, while the figure is 20 percent for a conventional loan.

The loan is allocated in Azerbaijan’s national currency, the manat, and the beneficiaries should be Azerbaijani citizens.

Mortgages are only given for apartments or private housing and the amount should not exceed 80 percent of the market value of the property. The monthly payment for a loan must not exceed 70 percent of the monthly income of the borrower, who should also produce a copy of his/her life insurance agreement.

The family members of martyrs, families of National Heroes of Azerbaijan, internally displaced persons, civil servants with work experience of no less than three years, Ph.D. holders, persons who have achieved special merits in sports, as well as military service with a minimum period of three years’ service can enjoy these preferable rates.

The social loan can only be issued one time per household.

Apartments in new buildings preferable

Real estate has always been considered a reliable investment instrument to preserve and increase capital. The increase in cash flow into the real estate market usually makes a net positive effect on a country’s overall economic development.

The development of the construction industry has ripple effects on reducing unemployment, the rehabilitation and strengthening of financial markets, the manufacturing of construction materials and naturally serves as a primary tool for solving a country’s housing problems.

In the agenda of the Azerbaijani government's plan to develop the country's non-oil sector, the growth of investment in the construction industry has become a priority.

According to the State Statistics Committee, Azerbaijan’s per capita housing stock stood at 14.86 square meters in 2001.

Since then, it has increased by 38 percent or 45.8 million square meters by 2013. But despite these incredibly high construction rates, per capita housing stock increased by only 2.92 square meters, and as of 2013 amounted to 17.78 square meters.

Azerbaijan's construction sector enjoys ample opportunities to expand thanks to various measures by the state. This year, experts expect a significant capital inflow in the housing market due to the population's high demand for real estate.

Emil Rahimov, AS Group Investment Company's marketing expert believes that it is profitable for customers to purchase apartments in new buildings that are at the initial stage of construction. In particular, clients prefer to invest in real estate during this initial stage, when the price per square meter is competitive.

"After completing the construction of an apartment, housing prices rise on average by 40-60 percent and sometimes by two-fold of the cost, offered by the construction company at the initial stage of the project," he told local media.

Azerbaijanis buy houses in Georgia

Azerbaijani citizens are on the list of top foreign investors of Georgia, with the greatest demand for real estate in the country.

Commenting on the possible reasons behind Azerbaijani citizens' interest in acquiring a residence permit in Georgia, migration expert Azer Allahveranov said that from an economic point of view, Georgia enjoys several advantages: it has access to the Black Sea, a direct border with Turkey, and a favorable tax and customs laws.

"In addition, life is not very expensive there. There are many factors that are attractive for our citizens. Many Azerbaijani students are studying in Georgia. A lot of joint ventures have been established in this country. A lot of companies have established their branches in Georgia. Only SOCAR has opened over 50 fuel stations in Georgian territory," he said. "All of this leads to the fact that a certain part of our specialists move to Georgia to work there in the framework of these projects."