Thursday, February 15 2018 14:48
Alina Hovhannisyan

Outflow of population and passivity of the Diaspora pushes property prices down

Outflow of population and passivity of the Diaspora pushes property prices down

ArmInfo. The State Committee of the Real Estate Cadastre published average market prices for real estate in Armenia in 2017. The downward price dynamics, according to official figures, is accompanied by an increase in the number of transactions for the purchase of sales and mortgage deals. At the same time, the economic activity of Armenia increased by 7.7% during the reporting period. However, with such a positive scenario, prices for real estate are declining. In an interview with ArmInfo, the director of the Real Estate Exchange, Artem A. Pribylsky, explained the situation in the real estate market of Armenia, and described the key factors of the price decline.

Mr. Pribylsky, real estate is one of the defining indicators of economic growth. The National Statistical Service has not yet published the final data on the results of 2017 on GDP growth. However, given the growth of economic activity, and quite good indicators in terms of accelerating industrial growth and increasing revenues of other areas - we can assume good results for economic growth. At the same time, according to the State Committee on Real Estate Cadastre, a significant price decrease is observed in the market. How can this situation be explained? It would be worthwhile to expect a positive price trend in connection with GDP growth, but the situation is different. What, in your opinion, is the reason for this "inconsistency"?

The fact is that in a country like ours - the economy cannot be an absolute indicator for the formation of a price policy in the real estate market. Because our prices are formed not only at the expense of economic growth, although this is a determining factor. Equally, foreign capital plays a role here, that is, the participation of the Diaspora, which along with the citizens of Armenia is a serious player in the market.  Looking at the results for the year, I cannot say that the Diaspora was active. In this scenario, the decline in prices, in my opinion, was affected by the intensification of migration processes. 7% growth in economic activity cannot satisfy anyone. We have not yet reached the level of indicators that had by the beginning of the 90s. The whole world has gone ahead, and we are standing still. Although I see certain positive developments. In other words, the real estate market is now a situation formed some kind of parity. We will wait for what will be.

You noted positive progress. What did you mean?

Today the market is growing interest in real estate for industrial purposes. If you exclude residential real estate and take only commercial - the situation is as follows. Stagnation in the market of real estate objects of commercial purpose and service sector lasts about 3 years. On the industrial segment of real estate - stagnation lasts long enough. Today, in terms of increasing supply and purchase, I see positive trends. But I say all this for a reason. Such a country as ours, this is an axiom, can develop only if it participates in some kind of large association, union. Unfortunately, we have been going for this for a long time.

However, today we can already talk about concrete progress, in particular in the sphere of manufacturing, namely agricultural products.

As for heavy industry, I find it difficult to assess. If the engineering industry raises its head, then it will be already possible to talk about real economic growth. Here, of course, I have more skepticism than vice versa. Because the industry requires large capital investments.

In other words, today it is not necessary to consider real estate as an attractive investment tool?

Today the situation is more than incomprehensible. As I said, there is some interest in the manufacturing sector. But when the country wants to get out of the collapse - engineering cadres - this is one of the foundations of economic development. And I still do not see any accents. In a country like ours, which, unfortunately, is equated with the status of a belligerent- investments are not made because of fears. The money we receive from international financial institutions is not invested in the real economy, but cover certain deficits.

Nevertheless, with the decline in prices, deals are growing both in Yerevan and regions, in particular, mortgage loans. How can this be explained?

The answer to your question remains the same migration. Relatively speaking, having 100 units of real estate, in developed countries, there are potentially 5 units sold per year. With the intensification of migration processes - the supply indicator increases to 10-15 units, it is noteworthy that this process is accompanied by a fall in prices. What we have today. In other words, the growth of deals with a decline in prices is possible only under such a scenario. Regarding mortgage deals - of course, I can note positive trends. Interest has increased significantly. When in the early 90's in the US 90% of real estate transactions accounted for a mortgage, in Armenia this figure was only 0.5%. Today, in the total volume of transactions with real estate, the share of mortgages has reached 50%. This is quite normal if we take into account the level of incomes of the population and the tendency of lowering interest rates over the past two years. If the regulator will follow this process, it is possible that mortgage rates will continue to decline.

And what can we expect in 2018? What trends can be traced?

At the best, stagnation of prices is waiting for us, if the growth in the manufacturing industry continues.  This is at best. Figuratively speaking, stagnation can be equated to the foundation of the building that they want to build. How will the "foundation" - then you can count on some growth. But to stagnate it is still necessary to come. In addition, I do not see the concept of development of joint-stock companies, which, in principle, ensure the development of primarily capital-intensive industries.

To improve the situation in the first place, in my opinion, we need cheap loans for the construction sector, the legislative order from the local authorities and the real economic growth. Therefore, emphasis should be placed on industrial development. Industry is our tomorrow. Otherwise, migration will intensify.

According to the State Committee of Real Estate Cadastre, the average market value of housing in Armenia decreased by 2.8% in 2017, making 178.8 thousand AMD ($ 370) /1kv.m., Versus 0.2% growth for 2016.  According to the source, the average apartment prices in the year (2017 to 2016) fell by 3.8% - to 173.7 thousand AMD / 1 sq. M. In particular, the price of an apartment in Yerevan was 265.3 thousand drams / 1 sq.m. (With an annual decline of 3.5%), and in the regions - 82.2 thousand. AMD / 1 sq.m. (With an annual decline of 4.9%).

Meanwhile, prices for private homes on average for 2017 fell by 1.8% to 183.8 thousand drams / 1 square meter. In the capital cost of 1 sq.m. private house for the year decreased by 2.3% to 280.2 thousand drams, and almost the same decline was recorded in the regions - by 2.5% - to 87.5 thousand AMD.

In total, the price of 1 sq.m the capital's residential real estate (multi-apartment buildings and private houses) fell by 2.9% on an annual basis, an average of 272.7 thousand AMD. In the regions, prices for 1 sq.m. Residential real estate (multi-family houses and private houses) fell 2.6% to 84.8 thousand AMD.

Related articles
Artem Pribilsky: Growth in apartment prices demonstrates that property market is recovering after AMD depreciation
 Friday, July 17 2015
The growth in apartment prices in May 2015 as compared to early 2015 demonstrates that the  property market is recovering after the AMD depreciation of December 2014, Artem Pribilsky, Director of the Armenian Real Estate Market, has told ArmInfo.   "That insignificant growth does not mean serious changes. It only demonstrates the market stabilization following the drop
 Wednesday, February 5 2014
Expensive mortgage loans curb demand for real estate in Armenia
 Tuesday, February 4 2014
ArmInfo. Expensive mortgage loans curb demand for real estate in Armenia, Head of the Yerevan Real Estate Exchange Artyom Pribylsky said in an interview to ArmInfo. He said that the deferred demand for real estate existing in Armenia for the moment can reanimate the country's secondary housing market. "Most of Armenians today can buy a
POST A COMMENT
Input digits     


News
EBRD: Business environment and level of development of Armenia`s  financial system create an attractive basis for deepening cooperation  with the Central Bank of ArmeniaEBRD: Business environment and level of development of Armenia`s  financial system create an attractive basis for deepening cooperation  with the Central Bank of Armenia
Armenia and Georgia discussed a wide range of issues on partnership  in agricultural sectorArmenia and Georgia discussed a wide range of issues on partnership  in agricultural sector
In 2018, $ 3.5 million was invested in Artashat cannery In 2018, $ 3.5 million was invested in Artashat cannery "Artfood".
Moodys: In Armenia, the concentration of the largest deposits of an  average bank reaches 37%Moodys: In Armenia, the concentration of the largest deposits of an  average bank reaches 37%
Pashinyan: Armenia plans to turn from agrarian to technological  countryPashinyan: Armenia plans to turn from agrarian to technological  country
Year-over-year growth of economic activity in Jan-Aug 2018  accelerated from 5.5% to 7.7%Year-over-year growth of economic activity in Jan-Aug 2018  accelerated from 5.5% to 7.7%
Research: 95% of seasonal and 70-75% of long-term Armenian labor  migrants keep their way to RussiaResearch: 95% of seasonal and 70-75% of long-term Armenian labor  migrants keep their way to Russia
Armenian banks and Central Bank of Yerevan will work on Sept 21-22  because of elections of Yerevan`s MayorArmenian banks and Central Bank of Yerevan will work on Sept 21-22  because of elections of Yerevan`s Mayor
The ban on transportation of grain by truck in Georgia is postponed  until the end of this yearThe ban on transportation of grain by truck in Georgia is postponed  until the end of this year
Pailak Tadevosyan: Governments change in Armenia, but taxation  approaches do not changePailak Tadevosyan: Governments change in Armenia, but taxation  approaches do not change
CBA: In Armenia, the annual dynamics of the card market has sharply  reversed with a decline of 16%.CBA: In Armenia, the annual dynamics of the card market has sharply  reversed with a decline of 16%.
Armenia`s SRC announces double increase in VAT refunds and return of  income tax to compensate interest on mortgagesArmenia`s SRC announces double increase in VAT refunds and return of  income tax to compensate interest on mortgages
Central Banks of Armenia and Russia will exchange information on  cyber threatsCentral Banks of Armenia and Russia will exchange information on  cyber threats
Deputy Prime Minister of RA: Statistical information is a resource  for sustainable development of economy, demography, social and  environmental spheresDeputy Prime Minister of RA: Statistical information is a resource  for sustainable development of economy, demography, social and  environmental spheres
IDBank in cooperation with EIAA will provide local  producers-exporters with affordable, unsecured, risk- free financingIDBank in cooperation with EIAA will provide local  producers-exporters with affordable, unsecured, risk- free financing
Expert: Armenia has a problem with effective use of water resources,  rather than small hydropower stationsExpert: Armenia has a problem with effective use of water resources,  rather than small hydropower stations
Polymetal International plc has been included into the Dow Jones Sustainability Emerging Markets Index (“DJSI”) Polymetal International plc has been included into the Dow Jones Sustainability Emerging Markets Index (“DJSI”)
Wheat importers demand to lift Georgian government ban on  transportation of wheat by roadWheat importers demand to lift Georgian government ban on  transportation of wheat by road
Private taxi drivers to be released from any kinds of taxes Private taxi drivers to be released from any kinds of taxes 
Hanergy Chinese company is interested in building an enterprise  producing solar batteries in ArmeniaHanergy Chinese company is interested in building an enterprise  producing solar batteries in Armenia
Armenia will take part in the program of the EBRD "Green cities"  worth $ 228 million
Plant Plant "Rusal" in Armenia began to reduce production due to sanctions
Investment forum Investment forum "Energy Week 2018" to be held in Armenia
Head of Central Bank of Republic of Armenia Artur Javadyan was  re-elected to post of Chairman of Interstate CouncilHead of Central Bank of Republic of Armenia Artur Javadyan was  re-elected to post of Chairman of Interstate Council
In the border communities of Tavush region of Armenia, process of  buying grapes beganIn the border communities of Tavush region of Armenia, process of  buying grapes began
The third annual The third annual "Eurasian Week" will be held in Armenia from October  22 to 24
Advisor to the Minister: By 2030, the volume of production of jewelry  and faceted products in Armenia can reach $ 1 billionAdvisor to the Minister: By 2030, the volume of production of jewelry  and faceted products in Armenia can reach $ 1 billion
Gagik Mkrtchyan: Armenia actively participates in the development of  a project to create a Eurasian jewelry brandGagik Mkrtchyan: Armenia actively participates in the development of  a project to create a Eurasian jewelry brand
Advisor to Minister: Holding Advisor to Minister: Holding "Eurasian Week" forum will be a good  platform for discussing areas of cooperation in jewelry and faceting  sectors
VTB Bank (Armenia) has already cancelled fines / penalties for 2000  bad loans amounting more than 1 billion dramsVTB Bank (Armenia) has already cancelled fines / penalties for 2000  bad loans amounting more than 1 billion drams


Exchange rates
24.09.2018
RUB7.310.03
USD482.27-0.17
EUR567.633.03
GBP632.79-4.27
CAD372.61-1.20
JPY42.81-0.19
CNY70.550.15
CHF502.993.62

Experts
Rouben Indjikian: Everyone should follow the established unified and fair rules of the gameRouben Indjikian: Everyone should follow the established unified and fair rules of the game
Mher Arakelyan:  Armenia`s payment business has great prospectsMher Arakelyan:  Armenia`s payment business has great prospects
Rating-Agentur Expert RA GmbH and AmRating issued an industry report  on Armenia`s banking systemRating-Agentur Expert RA GmbH and AmRating issued an industry report on Armenia`s banking system
Igor Nazaruk: Each planted sprout has the right to a successful prospect if it is cherished and taken care ofIgor Nazaruk: Each planted sprout has the right to a successful prospect if it is cherished and taken care of
Ara Khzmalyan: Armenia is comfortable to Russian touristAra Khzmalyan: Armenia is comfortable to Russian tourist
The Armenian delegation to the US followed the advice of President TrumpThe Armenian delegation to the US followed the advice of President Trump
Outflow of population and passivity of the Diaspora pushes property prices downOutflow of population and passivity of the Diaspora pushes property prices down
Finombudsman: Amendments to the Civil Code on the imposition of fines and penalties will reduce the number of outstanding loans and  non-creditworthy consumersFinombudsman: Amendments to the Civil Code on the imposition of fines and penalties will reduce the number of outstanding loans and non-creditworthy consumers
Vahan Shakaryan: If we promote Armenia, the promotion of economic sectors will not be a run with obstacles, but a light run for short distancesVahan Shakaryan: If we promote Armenia, the promotion of economic sectors will not be a run with obstacles, but a light run for short distances
Gagik Aghajanyan: There is no need to look for alternatives - it is necessary to work and develop actual   directionsGagik Aghajanyan: There is no need to look for alternatives - it is necessary to work and develop actual   directions
Vitaly Nesis: Armenia is very promising from the geological point of viewVitaly Nesis: Armenia is very promising from the geological point of view
The market of OSAGO goes into virtual spaceThe market of OSAGO goes into virtual space
Ishkhan Mkhitaryan: ArCa and Mir complete the technological part of the project of interaction, business for banksIshkhan Mkhitaryan: ArCa and Mir complete the technological part of the project of interaction, business for banks
The second stage of implementation of the program for prolonging the lifetime of the power unit N2 of the Armenian NPP beginsThe second stage of implementation of the program for prolonging the lifetime of the power unit N2 of the Armenian NPP begins
Successful business is forging for years - to the jubilee of IC Successful business is forging for years - to the jubilee of IC "INGO Armenia"
Armen Shahnazaryan: The double increase in the insurance portfolio of EIAA ICJSC by the end of 2018 is quite feasibleArmen Shahnazaryan: The double increase in the insurance portfolio of EIAA ICJSC by the end of 2018 is quite feasible
Expert: Real estate market of Armenia started demonstrating weak  signs of recovery in I half-yearExpert: Real estate market of Armenia started demonstrating weak signs of recovery in I half-year
Amulsar: Ecology and РeopleAmulsar: Ecology and Рeople
GeoProMining - ten years of work for the benefit of the country, at the forefront of gold miningGeoProMining - ten years of work for the benefit of the country, at the forefront of gold mining
SolarOn will become a catalyst for the development of solar energy in  ArmeniaSolarOn will become a catalyst for the development of solar energy in Armenia

Search by date

Government Bonds

 

ISIN AMGB1029A250
Auction ID AMGB1029A250A
Date 12.05.2017
Issue date 29.10.2015
Issue volume (AMD) 50 000 000 000
Maturity date 29.10.2025
Coupon year yield 11.00%
Auction volume (AMD) 1000 000 000 - 2.000 000 000
Auction date 12.05.2017
DLS
Total amount (AMD) 1 000 000 000
Amount of the total bids (AMD) 787 200 000
Amount of the total accepted bids (AMD) 787 200 000
Cut of yield (%) 10,6447
Weighted avrage yield (%) 10,6447
Auction max  yield (%) 10,6447
Auction min  yield (%) 10,6447
Number of participants 5
ArmEx

 

СПРОС (Покупка)

USD

Средневзв. Цена

482,00

ПРЕДЛОЖЕНИЕ (Продажа)

  USD

Средневзв. Цена

-

СДЕЛКИ

USD

Цена откр.

482,00

Цена закр.

482,00

Мин. Цена

482,00

Макс. Цена

482,00

Ср/взв. Цена

482,00

-0.16

Кол-во сделок

1

Объем (инвал.)

200 000

0бъем (драм)

96 400 000

Commented
Expert: Armenia has a problem with effective use of water resources,  rather than small hydropower stationsExpert: Armenia has a problem with effective use of water resources,  rather than small hydropower stations
Investment forum Investment forum "Energy Week 2018" to be held in Armenia
Expert: It is necessary to start implementing the program for the  construction of a new nuclear unitExpert: It is necessary to start implementing the program for the  construction of a new nuclear unit
The updated feasibility study of construction project of electricity transmission line Armenia- Georgia will be ready by the end of the year - the Ministry of EnergyThe updated feasibility study of construction project of electricity transmission line Armenia- Georgia will be ready by the end of the year - the Ministry of Energy
Eurasian Development Bank wishes to expand its activities in ArmeniaEurasian Development Bank wishes to expand its activities in Armenia
FRV: Armenia`s growing desire to increase renewable energy sources is  a decisive factorFRV: Armenia`s growing desire to increase renewable energy sources is a decisive factor
Suren Papikyan: It`s safe now to do business in Armenia, assures  Armenian MinisterSuren Papikyan: It`s safe now to do business in Armenia, assures  Armenian Minister
Armenian state debt started reducing up to $6.7 bln to June 1 2018Armenian state debt started reducing up to $6.7 bln to June 1 2018
Minister: Implementation of program on liberalization of the electric  power complex of Armenia will be completed within the next two yearsMinister: Implementation of program on liberalization of the electric  power complex of Armenia will be completed within the next two years
Nikol Pashinyan: In a number of cases after paying fines and  penalties the borrowers will be allowed to take new loan Nikol Pashinyan: In a number of cases after paying fines and  penalties the borrowers will be allowed to take new loan 
German bank KFW urges Armenia to build power line in the direction to  GeorgiaGerman bank KFW urges Armenia to build power line in the direction to  Georgia
Anna Chobanyan-one of most likely candidates for new Head of General  Department of Civil Aviation Anna Chobanyan-one of most likely candidates for new Head of General  Department of Civil Aviation 
IFAD confirms its readiness to develop and implement new joint programs with Armenia`s Agriculture MinistryIFAD confirms its readiness to develop and implement new joint programs with Armenia`s Agriculture Ministry
Rosselkhoznadzor asks not politicize the issue of deliveries of tomatoes from Armenia to RussiaRosselkhoznadzor asks not politicize the issue of deliveries of tomatoes from Armenia to Russia
Armenian nuclear power station has a resource for work for another 30  yearsArmenian nuclear power station has a resource for work for another 30 years
Premier: Construction of a new nuclear power plant in Armenia is one of the priorities of the new government of the countryPremier: Construction of a new nuclear power plant in Armenia is one of the priorities of the new government of the country
In Armenia, an online service has been activated that allows  calculating the cost of customs clearance of a carIn Armenia, an online service has been activated that allows calculating the cost of customs clearance of a car
Gyumri programmers won on hekaton Gyumri programmers won on hekaton "Innovative ideas for tourism development"
Armenian Lori opens a large international ski resortArmenian Lori opens a large international ski resort
A number of light and alcohol industry enterprises of Armenia will be  provided with state supportA number of light and alcohol industry enterprises of Armenia will be provided with state support
Expert: The attitude of Armenian public to the nuclear power industry is demonstrated not by the promiseExpert: The attitude of Armenian public to the nuclear power industry is demonstrated not by the promise
Expert: The biggest gap in procurement legislation is the lack of an institution for accountability for its violationExpert: The biggest gap in procurement legislation is the lack of an institution for accountability for its violation
Maxim Sokolov: Russian Federation remains the main trade partner of  ArmeniaMaxim Sokolov: Russian Federation remains the main trade partner of Armenia
Russian MP: Restoring railway communication between Armenia and  Russia through Abkhazia and Georgia meets the economic interests of  Yerevan and MoscowRussian MP: Restoring railway communication between Armenia and Russia through Abkhazia and Georgia meets the economic interests of Yerevan and Moscow
Amulsar program was awarded a certificate of compliance with ICMC standards in pre-production cycleAmulsar program was awarded a certificate of compliance with ICMC standards in pre-production cycle
Expert: Subsidizing is the worst model of softening the results of price increaseExpert: Subsidizing is the worst model of softening the results of price increase
Fitch improved outlook on Yerevan`s rating from Fitch improved outlook on Yerevan`s rating from "Stable" to "Positive"