Let me quickly go through statistics data on Azerbaijan residential property market. However, I myself never make property investment because (i) there is a currency depreciation risk, and (ii) decent price trend data is unavailable. Population and Household Number of households grows by faster pace than population growth. Azerbaijan has 9.8mn population with 1.2% annual growth from 2010. The population is expected to reach 11.8mn (+20%) at 2050. Average household size is under declining trend due to urbanization / decreasing birth rate / diversification of life style, etc. So, if above Household size data is correct one, number of household should be under rapid hike. Let’s compute it from above 2 charts. Number of Households has recorded 4.6% annual growth after 2010. In Baku, it the growth rate is 5.9%. Not sure the rapid change in Household size data is correct one, but I think there is an obvious trend that number of Households are increasing under faster pace than population growth, as a result of diversification of life style, etc. You know, traditional life style in Azerbaijan is that children reside at home till their marriage at early 20s, and they never divorce once married. On the other hand, especially in urban area, you can see young guys sharing room, mid-aged single men/women or divorced men/women, they reside separately from their family. These diversification of life style should be the reason of increasing household numbers. Dwellings Stock Modest 1.0% annual growth from 2010. OK, let’s have a look at dwellings stock in below chart. Note that this number does not include dwellings in hostels. Dwellings stock has recorded 1.0% annual growth and reached 2.0mn at 2017. Till 2015, dwellings stock is almost same as households number, but in 2017 when households number rapidly hiked to 2.3mn, Dwellings stock was just 2.0mn. How can I explain the 0.3mn gap? Someone may stay at hostels/hotels, but the total room supply of hotels/hostels is just c.20,000, so it is not enough to explain 0.3mn gap. Perhaps, some dwellings are registered as commercial property or not appropriately registered. And guess young guys may use room sharing. Anyway, dwelling stocks supply may be tight. Construction c.15,000-16,000 annual introduction of new dwellings. Average area of new dwellings is under increasing trend. Annual introduction of new dwellings peaked at 2012-13 with c.20,000+ p.a., followed by declining/stabilizing phase. Average area of new dwellings is under increasing trend. Property Transaction House/apartment registration shows strong growth in 2018 and is expected to reach c.100k level in 2018, especially thanks to strong momentum in apartment sector. Below chart shows registration of house and apartment. Assume this number is linked to number of property transactions. (Of course, there should be noise data included e.g. inheritance.) The property registration had a declining phase through 2015-16, but entered into recovery phase from 2017, when 90k registration was held. In 1H2018, further growth was observed in apartment segment (+18% v.s. 1H2017). I suspect annual property registration will be c.100k record-high level in 2018, thanks to the strong momentum in apartment segment. Annual initial registration of house / apartment is c.30k, which is almost double of new introduction of dwellings stocks from Construction statistics… Not sure how this happens… House occupies more than half of initial registration. Mortgage AMF loan is dominating mortgage loan balance. Major borrowers are young male working in public sector in Baku and looking for apartment with AZN 30,000-60,000 price. Mortgage loan balance is AZN c.1.8bn as at 2Q 2018 and being stabilized from 2016. As Azerbaijan Mortgage Fund (AMF) provides lower interest loan, contribution from AMF is rapidly increasing and reached AZN 1.0bn or 59% of total loan balance at 2Q 2018. Number of borrowers of AMF loan is just c.23k as at 2Q 2108. Borrowers of AMF loan have increased c.5k after 2015, i.e. pretty modest growth compared to property registrations in market (c.70-90k p.a.). Suspect (i) cash transactions without mortgage are active, and (ii) transactions between AMF borrowers are active, i.e. borrower number is unchanged. 76% of AMF loan borrowers are concentrated in Baku. Borrowers’ profile is available on AMF loan. 53% single, 83% Male, 49% working for public sector and 70% less than 35 years old. Young Male working for state-owned companies / government utilize AMF loan for coming marriage or investment purpose. Collateral info is also available for AMF loan. 94% apartment, 40-80m2 size occupies 64% and AZN 30,000-60,000 value zone occupies 73%. Regarding Baku, regional breakdown is available for AMF loan. Top 3 districts are Khatai (25%), Yasamal (16%) and Binagadi (14%). Property Price Decent data is unavailable... Price info is pretty limited. This is the reason why I never make investment in Real Estate. Some news articles mentions price info. (https://www.azernews.az/business/138373.html) Or, property appraisers have a data, which can be provided on fee basis, if you want.
4 Comments
10/21/2023 07:38:21 pm
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11/5/2023 09:07:08 pm
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11/22/2023 10:08:30 am
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