The number of commissioned residential buildings and sale transactions in Tashkent has decreased in 2024, despite persistently high demand for housing. Price growth has slowed. Experts discussed urban development issues, the capital's master plan, escrow accounts, and presented forecasts for further development.

Analysts from the consulting company Commonwealth Partnership Uzbekistan (CMWP) presented their research on the Tashkent residential real estate market for 2024. Gazeta.uz analyzed the main findings of the report.

Experts note that against the backdrop of stable population growth since 2014, driven by economic development and infrastructure improvements, Tashkent continues to be the primary center of attraction for migration from the country's regions. Young professionals and families are drawn to the capital for employment opportunities, education, and improved quality of life.

While the Tashkent real estate market experienced rapid growth in previous years, activity declined in 2024. The number of transactions decreased, and price growth slowed, despite sustained high demand. According to the Center for Economic Research and Reforms (CERR), the first half of the year saw the lowest number of new properties commissioned in the last three years. Concurrently, the market is experiencing a price decrease.

Prior to 2023, high demand for residential real estate led to a significant price increase and market overheating. This incentivized developers and sellers to actively launch new projects, thereby increasing available supply. However, by 2024, a substantial portion of this supply had been sold. Buyers, primarily using personal savings, had exhausted their capacity to make new deals at the previous volume.

Consequently, despite continued interest in real estate, the market has entered a correction phase. This is reflected in price stabilization or moderate decreases, aligning with current buyer financial capabilities.

"In our view, sales and prices will remain stable in 2025 but will not reach the growth figures of 2022 and 2023. The same applies to the fourth quarter of 2024," noted Alexey Letunovsky, head of the CMWP analytical group.

In 2024, the most popular districts for construction were Mirzo-Ulugbek, Yashnabad, and Yunusabad. The Yashnabad district predominantly features "Comfort" class projects, while "Business" and "Premium" segments are more concentrated in the Mirzo-Ulugbek district.

The average cost per square meter for secondary housing in Tashkent was $1216, and for new buildings, it was $1251. The average apartment price, with a typical area of 50-60 sq. m., ranges from $82,060 to $99,174, depending on the segment.

For business-class apartments, the average rental cost was $17 per sq. m., and for premium-class, it was $22. However, experts claim that actual prices are often lower than advertised: when signing a lease agreement, landlords reduce the price by an average of 23%.

According to CERR data, the average rental rate per square meter in August 2024 was $8.25. Converted to typical areas for business and premium-class apartments, this amounts to $635 and $767 respectively, which is 25-30% lower than market prices.

"The main reason for understating these rates is the landlords' desire to minimize tax payments," the CMWP report states.

 

Experts representing leading development companies and urban planning organizations highlighted key problems and challenges related to the development of Tashkent's urban environment, and also shared their forecasts for the capital's future development.

Dmitry Kuznetsov, Development and Investment Director at Murad Buildings, stated that comprehensive land development in Tashkent is only possible on former industrial sites or within renovation projects. In all other cases, it involves piecemeal construction, which is attributed to the absence of an approved master plan.

 

"This is precisely why the city is developing towards New Tashkent. The main challenge for Tashkent's development is the modernization of the city's engineering infrastructure. Furthermore, comprehensive land development will proceed very slowly without project financing and accessible mortgages, which is why most developers focus on small development plots of up to five hectares," Kuznetsov emphasized.

Vadim Pavlov, Product and Architecture Director at Golden House, pointed to issues related to urban planning regulation, land use planning, social requirements, and sanitary protection zones. He also cited the absence of a master plan or any single document with clear regulations as the primary cause of these complexities.

 

"This problem is exacerbated by outdated norms, which, in turn, are a combination of new and old norms from CIS countries. The market supports the introduction of regulations and the updating of normative requirements, and also expresses readiness to cooperate with government bodies. However, at present, the interaction between private sector experts and government specialists is insufficiently established, creating difficulties in implementing new regulations," Pavlov noted.

It is recalled that by a government decree of Uzbekistan dated December 24, 2024, the master plan for Tashkent until 2045 was approved. Two years ago, Gazeta.uz published an extensive interview with Saidazim Sharipov, Deputy Director for Urban Planning and Scientific Projects at the "ToshkentboshplanLITI" institute, in which he detailed the key provisions of the capital's master plan project.

Ilyas Karimov, Director of Construction and Renovation Department at "Tashkent Invest" company, highlighted difficulties in interaction between investors and state structures.

"One can specifically note the unregulated timelines for service provision and approvals, and the absence of a single body for coordinating investment projects, which leads to delays in implementation," Karimov noted.

The expert emphasized that the shortage of land for quality development forces developers to resort to piecemeal projects, which often leads to an increase in land plot costs and, consequently, a decrease in construction quality. He sees the solution to these problems in developing local urban planning standards that would consider the capital's specifics, and in approving the city's master plan.

"This is because the piecemeal development method often requires significant expenditure on land plots, which limits the budget for the construction of the building itself," he explained.

Urban planner Alisa Barannikova noted problems related to top-level regulation. She drew attention to the lack of thoughtful integration of new buildings with existing structures and social infrastructure. Furthermore, there are no mechanisms to ensure the incorporation of new facilities into the established urban environment.

Experts also commented on escrow accounts. Vadim Pavlov noted that their implementation without accompanying project financing tools and additional mechanisms for protecting co-investors could negatively impact developers. He believes this will lead to market consolidation, reducing the number of players.

Plans for introducing escrow accounts in Uzbekistan were announced by the president in September 2024. Alexey Letunovsky explained in an interview with Gazeta.uz what escrow accounts are and how they can affect the real estate market.

According to Yodgor Gafurov, co-founder of TAS Capital Partners, the introduction of escrow accounts will lead to the consolidation of developers and an improvement in the quality of their offerings. He noted that current standards are significantly inferior to those in neighboring countries. This, in turn, opens up opportunities for growth, including for foreign investors who are increasingly focusing on quality improvements.

Sardor Niyazov, General Director of Parkent Development, emphasized that escrow accounts introduce an additional regulatory body to the market – a bank – which will enhance transaction transparency.

"Of course, this may pose a challenge for some developers, as escrow accounts will lead to increased costs. However, only those developers who create high-quality projects will remain in the market," he said.

Marat Zinurov, Sales Manager at Parkent Development, added that Tashkent is a center of migration from regions with lower purchasing power. Therefore, demand in the capital will primarily be concentrated in the mid-range and economy segments.

Dmitry Kuznetsov noted that land prices in Tashkent have reached an all-time high. Consequently, in central locations, "Comfort" class projects are no longer being implemented, as the high entry cost forces developers to focus on higher-class projects. "Economy" and "Comfort" class projects are predominantly scattered across the city's peripheral areas near metro stations.

 

Additionally, experts discussed the prospects of the New Tashkent project. Anzhelika Safronova, a specialist at Baza real estate agency, believes the project has significant potential for long-term investment. However, the payback period is at least five years, making it unlikely to be suitable for investors seeking quick returns within a year. Nevertheless, interest in New Tashkent continues to grow, as many see the area as a promising place to live with modern infrastructure and a comfortable environment.

In September of last year, Gazeta.uz published an extensive video interview with Saidazim Sharipov, the chief architect of New Tashkent, in which he answered a number of key questions regarding the construction of the new city.


Source: Gazeta.uz 

Photo: Evgeny Sorochin / Gazeta.uz