Denis Sokolov's Opinion Column: How real estate speaks and why it's important to understand its language

The Real Estate Market in Uzbekistan: From "Buy Cheap, Sell High" to Efficient Use of Space

The real estate market in Uzbekistan is in its early stages of development, but the trend of "buy cheap, sell high" is already evolving. Today, there is growing demand for the ability to use spaces effectively. Why is this important, and how can we learn to do it? Real estate analyst Denis Sokolov explores these questions in his column.

Denis Sokolov is a partner and managing director of Commonwealth Partnership Uzbekistan (CMWP), an international consulting company specializing in commercial real estate. He is also a member of the Royal Institution of Chartered Surveyors (RICS). In his column *The Language of Real Estate*, the expert explains the structure and characteristics of the real estate market and shares his forecasts for its development.

Since ancient times, humans have organized the spaces around them—constructing buildings, cultivating land, and building roads. The urban landmarks and architectural monuments we admire today as tourists were once ordinary marketplaces, administrative buildings, residential houses, and the like. Over centuries, humanity has mastered the art of constructing complex structures like skyscrapers, bridges, and airports. Yet, the essence remains unchanged: human civilization is inextricably linked to real estate.

Today, real estate markets serve as the foundation of wealth for families, nations, and corporations. In developed countries, real estate transactions account for 15–20% of GDP. In Uzbekistan, the sector currently contributes only 5.4% to GDP, indicating that it is on the verge of revolutionary changes.

We often view real estate as something foreign, even though we interact with it daily. Abroad, terms like "real estate," "mortgages," "appraisals," and "flipping" are widely used, whereas in Uzbekistan, people simply refer to "apartments and houses," "primary/secondary markets," and "mahallas." However, the lack of specialized terminology does not mean our market is fundamentally different from others. 

In the United States, more than 50% of household assets are in real estate. The total value of homes and apartments owned by Americans is comparable to the value of all American companies. In Uzbekistan, households also prioritize investing in real estate. Around 95% of households live in their own homes, and the limited development of mortgage lending does not hinder the growth of the residential real estate market. Beyond housing, Uzbeks invest in retail and office spaces. However, simply investing money is not enough; properties must benefit the city and generate income for their owners.

While the primary motivation for investments used to be buying cheap and selling high, the growing economy and urban environment are shifting the focus to the efficient use of spaces. The value of real estate increases only if it can be used effectively: quality housing in attractive areas, shops in busy locations, and well-designed offices.

To distinguish good real estate from bad, it is essential to understand the language of the industry, including economic trends, financial mechanisms, and lending systems. One must also know their city—its secrets, culture, and history.

A city can be seen as a Lego set made up of individual blocks representing different real estate formats. There are over 25 types of retail spaces alone. Unfortunately—or fortunately—there is no instruction manual for assembling a city, making every city and district uniquely its own. *Urban Studies*, the science of urban development, is one of the most in-demand fields globally.

Many people wonder why apartments in capital cities are much more expensive than in regional towns. In the UK, the cheapest rent in Bradford is £500, while a similar apartment in London costs four times as much. In the United States, the rental cost difference between the cheapest city (Wichita, Kansas) and New York City is eightfold.

This price disparity can be explained by the fact that large cities are factories for producing human and financial capital. Cities provide opportunities for career growth, education, and networking with interesting people. Therefore, high population density in a city is not a drawback but an advantage. A thriving urban economy rewards every additional effort. New skills, knowledge, and hard work lead to faster income growth in dynamic cities compared to "stagnant" towns.

Wealth depends not only on how much we earn but also on how wisely we manage our money. It is not enough to simply build a stadium—it must operate continuously, bring joy to spectators, and generate revenue. Unfortunately, this is not always the case. In Brazil, the largest stadium, built at a cost of $900 million, was closed a year after opening because its attendance, designed for 70,000 spectators, never exceeded 5,000. Such poor decisions and mistakes in economic calculations led to enormous losses for the country.

Learning to drive a car requires spending months studying the rules, learning to handle unexpected situations, and predicting the actions of others. Life in a modern city is no less complex. Urban residents must know how to earn, save, and spend their money wisely, while entrepreneurs must understand how to provide jobs, manage risks, and contribute to their country’s development. Uzbekistan’s economy grows by 6% annually, more than twice the global average. As the country becomes wealthier and incomes rise, effective wealth management—of which real estate is a major component—becomes increasingly important.

We will keep an eye on economic news and study international practices to make informed decisions, ensuring that our companies grow and our families prosper. By learning to speak the language of real estate, we can easily engage in dialogue with bankers, investors, retailers, and foreign experts. Ultimately, this will make our cities increasingly comfortable and attractive for residents, tourists, and investors alike.

Source: Gazeta.uz 

Photo: Evgeniy Sorochin / Gazeta.uz