Monday, February 29 2016 15:14

Armenia real estate market logjam will break no sooner than in two years

Armenia real estate market logjam will break no sooner than in two years

ArmInfo. Stagnation in the real estate market of Armenia will continue for at least 2 years, Marina Chatinyan, the director at Bars Real Estate Agency, told ArmInfo.

She said the standstill results from the influence of the global political and economic situation, the slackening economies of the partner-countries, especially Russia, as money transfers from that country have decreased along with the population incomes. All this is coupled with traditional restraining agents, such as unfriendly neighbor countries and economic blockade.

"Fortunately, the forecasts for 2016 cannot be consoling. Real estate operators and the processional actors in the market are waiting for the market to reach the minimum, the bottom, after which a slow, gradually increase may be possible," Chatinyan said.

Speaking of the downward trends of the last years, the specialist said the real estate market of Armenia have undergone fundamental changes after the crisis year 2008. First, a big number of realtors that catalyze the market growth have ceased their activities. Second, the number of the commercial premises and facilities in the country has decreased with the deteriorating business environment. Third, the real estate prices in the suburbs are sliding amid high prices in the city center.

"Actually, the main part of the supply is the real estate that should be sold promptly for a low price and the real estate that should be sold for the price set by the seller within a longer period of time.  Yet, neither of these terms can guarantee sales in the current conditions," the expert said.

She pointed at the unceasing decline of real estate transactions for the last years saying even the inflow of labor migrants from Russia has not awakened the market.

"The situation in Armenia's real estate market resembles the crisis year 1998, but now the situation is even worse," Chatinyan said.

According to the State Real Estate Register, the average market price of apartments in Yerevan increased by some 0.2% to 274.2 thousand drams per sq.m. According to the State Real Estate Register Committee of Armenia, prices of private houses in Yerevan were left unchanged - 287,000 drams per sq.m.  For comparison, the prices of apartments in Yerevan in 2014 grew 0.8% and in the region - 0.5%.  In the regions, apartment prices increased by 0.2%, which the prices of the private houses were left unchanged since 2014.

Real estate transactions in 2015 totaled 180,944 with a 15.5% decline year-on-year. Deals in Yerevan accounted for 34.4% of total. 27.6% or 50,023 of the total transactions were alienation deals, of which 72.8% are purchase and sale transactions.  Purchase and sale of apartments and private houses by 14.7% and 17.4%, respectively. 

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