Due to the sharp increase in land prices in and around Baku, the complexity of construction norms, and the further tightening of legal acts and requirements, construction volumes are not expected to be very high in the coming years.
Vugar Oruj, Chairman of the Azerbaijan Society of Appraisers, told İqtisadiyyat.az.
According to him, it can be predicted that prices will continue to rise due to the low volume of construction:
“The increase in construction costs can also play a special role here. That is, the increase in construction costs, the decrease in construction volume, and the decline in purchasing power will ultimately lead to two trends confronting each other. Both restrictions will cause price increases, and low purchasing power will cause a certain stagnation in the market. I do not expect prices to fall as a result of the mutual struggle of these two trends. However, I think that price increases will continue, but only at a slower rate compared to previous years. According to our forecasts, if the price of land increased by approximately 20-22% in 2025, I assume that in 2026, it will increase by about 70% of that, i.e., around 15%. As for other directions, for example, if old buildings increased by 9.4%, I estimate the increase this year to be around 6-7%. As for new buildings, if the price increase in new buildings was around 15%, I expect it to be lower in 2026, around 10-11%. That is, the growth trend will continue.”
V. Oruj stated that, however, the mentioned difficulties and market stagnation exclude this growth from being dynamic and continuous, and decisions made by the government regarding the economic situation, as well as the economic activity of the population, will play a special role here:
“With the right decisions and active economic activity, the forecasts we have made can be realized. If any anticipated difficulties become more complex, and the population does not pursue a path of active economic activity, then more negative forecasts can be made. But I think the peak years for price increases were 2023, 2024, and 2025, and it would be incorrect to expect growth at this pace in the next 5 years. There will be growth, but as I mentioned, it will not be a repeat of previous years, and we are not talking about fantastic price increases. In this regard, our forecast is as follows.”