CMWP Uzbekistan, a consulting firm, has prepared an overview of the rental rate structure for commercial properties in Tashkent.

The rental rate includes two types of components: fixed and variable. Fixed components cover three categories of expenses:

taxes (VAT, profit tax, property tax, and other taxes considered when setting the rate);

operational expenses (OPEX – maintenance, cleaning, security, etc.);

return on investment (amortization of initial construction or purchase and finishing costs, which constitutes the main portion of the fixed part).

Variable expenses represent the landlord's margin. The negotiation range is determined during lease agreement discussions and depends on both the property itself and the negotiation process.

The landlord's income from renting out the property can also vary. Typically, this income emerges several years after the property is leased, when the need to recoup investments decreases.

In developing markets, the marketed rate can significantly differ from the actual rate specified in the contract. A substantial negotiation range is linked to a lack of competition in certain real estate segments.

For new, high-class properties in Tashkent, the cost per square meter ranges from $30 to $47, with a negotiation range of $17. Of this, approximately $22 is allocated for return on investment, and about $3 goes towards OPEX.

For Class B or B+ properties leased less than five years ago, the trading range is $21-$33. Amortization accounts for approximately $15, and operational expenses are $2.

Rental rates for properties older than five years fluctuate between $10 and $28 per square meter. Here, along with the negotiation range (around $10), the income can vary (averaging $8 per square meter), while the fixed part of the rate significantly decreases.

Two methods are used for calculating rates in the commercial real estate market of Uzbekistan. The Triple Net method is employed for Class A buildings and involves stating only the base rate, excluding taxes and operational expenses.

With the All-in (Full Service Gross) method, taxes and operational expenses are included in the rate, while utility payments are billed separately. This method is typically used for Class B buildings.

 

Source: Spot.uz