Ukraine events lead to cash flow into Azerbaijan’s housing market

By: Aynur Jafarova

The recent events in Ukraine have led to an increase of cash flow into the real estate market in Azerbaijan, particularly in Baku.

Azerbaijani citizens, who have invested in the Russian real estate market, tend to invest in their homeland. Therefore, when a risky a development becomes risky in Russia, they channel their funds to Baku.

“The investors and businessmen, who work in the Russian market, prefer to invest part of their funds in the real estate market of Baku because of Russia’s market instability,” Nusret Ibrahimov, the CEO of MBA Consulting told local press.

Thus, after the events in Russia and Ukraine, the volume of cash flows to Azerbaijan’s housing market has been on the rise.

“A small portion of investors with a decent capital and willingness to invest in the real estate market in Russia, have been investing their funds in the European markets,” the expert added.

Baku’s rental market sees stable prices in summer

The rental market in the Azerbaijani capital Baku has been stable this summer.

Baku’s rental market is formed on the basis of demands of various groups. The first group includes people who come from the regions of Azerbaijan to work in Baku. The second group consists of people who move to the city to live in it. The representatives of the second group have no houses, so they rent apartments. The third group includes the students, and the fourth – the local people who do not have private houses.

“Most part of the rental market is formed thanks mainly to the students’ demands. Due to lack of enough dormitories, students are forced to rent apartments, and this factor has a particular pressure on the rental market. The massive internal migration of population in the country has also increased the demands for apartments,” independent realtor Rashad Aliyev said.

Recently, the demolition of some houses had a great impact on the rental market of Baku. After the demolition of houses, owners and renters started to search for new apartments. It, in turn, influenced the prices in the rental market.

Aliyev believes the rental prices may rise in September due to the end of vacations season and start of new academic year.

Changes in rental market prices are often related with the principle of supply and demand. If supply is less than demand, the prices would rise, but when supply is more than demand, the prices would fall.

The expert also said 50-60 percent of renters in Azerbaijan are willing to pay for renting an apartment no more than 500 manats, namely between 300 and 500 manats.