© Photo by Ferghana.Ru news agency

© Graphs provided by SKS Consulting, one of the leading real estate agencies in Uzbekistan.

Real estate prices in Tashkent are soaring. Prices of apartments and offices throughout the capital city are 2.5 times higher now than what they were last December. Experts predict another price-rise before the end of the year. Ferghana.Ru approached SKS Consulting Director Murad Abduhakimov for comments.

Ferghana.Ru: Why would prices soar? And when did it begin?

Murad Abduhakimov: Prices have been growing slowly since 2004. They made a noticeable leap in early 2006. This spring, SKS Consulting was approached by a great deal of customers from the Russian Federation and Kazakhstan who were after information on the state of affairs in the Tashkent real estate market. Their interest was attributed to the fact that real estate prices in the capital of Uzbekistan had been growing by 10-15% every month since December 2005. SKS Consulting therefore decided to compile a review of the real estate market for the investors used to dealing with hard facts and not rumors.

First and foremost, we interviewed the leading real estate agencies in Tashkent. To be more specific, we approached Farif, Diyor Servise, Stafar Konsalting, Ava Real Estate, Hayot Service, and Noka Real Estate. We got a lot of valuable information from them on the structure and dynamics of the real estate market. Their specialists were also asked for their opinion on the future developments in the market. The Municipal Tenements Center was kind enough to share its database with us. We compared it with the data obtained from real estate agencies. Assistance from Davinkom and Dalal Standard was invaluable. We even approached some foreign investors for comments. And yes, the Chamber of Commerce and Industry of Uzbekistan was of great help too.

We ended up with exhaustive data on the real estate market in Tashkent and singled out the factors that caused the price-rise.

No new tenements are being built in Tashkent. Exodus of the population all but stopped, and newcomers from the regions turn up en masse. This is the major factor, we believe.

The primary real estate market is nearly exhausted. Construction of new tenements in Tashkent these last five years was practically nonexistent.

The price-rise compelled local investors to turn attention to the real estate market and attracted Russian and Kazakh investors as well. Kazakh investors were particularly active this spring, buying between 30 and 50 apartments at once.

The market expects "major players" from Russia, Kazakhstan, and even Australia. This information cannot be dismissed as rumors or something, because more and more foreigners approach real estate agencies.

Ferghana.Ru: How much do apartments cost in Tashkent nowadays?

Murad Abduhakimov: A great deal of factors must be taken into account - the kind of the object, location, condition, and so on. Generally speaking, an average one-room apartment in Tashkent costs about $7,800 nowadays, two-room $12,417, three-room $18,137, and four-room $221,307.

Still, serious investors need more than that. There are other considerations at play - prestige of the location, internal design, transport and other infrastructure... Three-room apartments in the Yakkasarai, Gamzin, Yunusabad districts of Tashkent cost more than four-room ones in other districts. Apartments in the Mirabad district are sold and bought at more or less average prices, while the ones in the Sabir-Rakhimov and Chilanzar districts are somewhat cheaper. The cheapest three-room apartments (cheaper than elsewhere by almost 50%) are available in the Sergeli district.

Ferghana.Ru: Will the price-rise continue?

Murad Abduhakimov: I'd say that it will. As a matter of fact, experts predict that the prices will double before the end of 2006.

We believe that the price-rise will stop only when there are no more investors. It was citizens of Uzbekistan who were the principal buyers until recently. Things are changing now. Most locals have depleted their financial resources, and that forces them to turn to cheaper segments of the market (like the Sergeli district, for example). It is foreigners who are active buyers of real estate in Tashkent nowadays.

Estimating the volume of real estate market in Tashkent, we came up with the figure of $200 million. Inflow of major foreign capitals may spark another price-rise.

In the meantime, foreigners' preferences depend on their countries of origin. They are probably based on investors' own experience. Investors from Pakistan, for example, are enthusiastic about buildings in non-prestigious districts - say, old hostels. Men from Kazakhstan prefer opulent mansions and sumptuous apartments. They probably hope to return their investments soon. On the other hand, very many Kazakhs invest in construction too. Russian and Turkish investors are mostly interested in warehouses, railroads, and so on...

As we see it, he who bought real estate in Tashkent a year ago is particularly well off now.

Note

Unabridged text of the review (85 pages with graphs and tables) is available in paper or electronic versions at SKS Consulting

Phone: (+998 71) 133-5339/8218, 132-0712

Fax: (+998 71) 133-93-34

Cell phone: (+998 97) 102-75-20, 119-1779

Consulting.uz

Iroda_Azimbaeva@ciargroup.net, info@sks-consult.com

Contact: SKS Consulting Project Coordinator Iroda Azimbaeva