Monday, December 03, 2007

Real estate prices in 2007 through Q3

Real estate developments and the pace of construction through 2006 reviewed in previous posts were the top content of interest to visitors to this blog in November. In response to this growing interest, along with that of a media outlet, I have updated the information on real estate prices, as reported through the third quarter of this year.

While prices are likely to continue rising for the rest of the year, the pace observed from transactions over the first nine months of this year again point to rapid appreciation that matches the gains experienced last year. In Yerevan, the price of a squared meter increased by 27 percent, to a weighted average of 249,700 Drams; close to 50 percent when stated in USD (to about $706). However, the appreciation experienced by the various districts is in many ways unlike that of last year. The largest appreciation is now observed in Erebouni which grew near 50 percent, where the price increased from 155,800 to 219,800 Drams per sq. meter. In contrast, prices in Kentron, the city center, grew by only 17 percent, from 377,600 to 440,700, compared to near 30 percent last year. Below is a summary of the prices in Yerevan districts observed over recent years, both in Drams and USD. While not reported here, prices also grew in all regions. But more on this in a future article and after I update the info on aea .am.

What do these numbers mean? Well if you wanted to buy an apartment of 100 sqm (about 1000 sqf), it would have costed you about 44 million Drams, or about USD 124,500 (143,000 at today's exchange rate) in Kentron. You are looking at close to half that in Malatia - Sebastia.

Average price per sq. meter, in Drams

Yerevan Districts.. 2002.. 2003.. 2004.. 2005.. 2006 2007Q1-Q3
Kentron.......... 187772 222765 246500 288900 377600 440700
Arabkir.......... 114670 161300 193900 235300 298200 354500
Kanaker-Zeitoun... 68802. 98158 119200 143700 186100 258200
Nor - Nork........ 57335. 78538 101700 135100 171100 222300
Avan.............. 61635. 76396. 97000 122800 156200 210700
Erebouni.......... 55902. 83920. 96500 118800 155800 219800
Shengavit......... 61635. 83052 110600 143900 182700 235000
Davidashen........ 63069. 97116 120900 147100 189400 241700
Ajapniak.......... 57335. 84557 109500 138400 171800 226900
Malatia-Sebastia.. 55902. 81779 108600 134500 166800 214400
Nubarashen........ 28668. 36693. 43000. 69600 108000 122300
Yerevan*................ 100415 122500 152500 196700 249700

Stated in USD
Yerevan Districts.. 2002 2003 2004 2005 2006 2007Q1-Q3
Kentron............. 328. 385. 462. 631. 908 1245
Arabkir............. 200. 279. 363. 514. 717 1002
Kanaker-Zeitoun..... 120. 170. 223. 314. 447. 730
Nor - Nork.......... 100. 136. 191. 295. 411. 628
Avan................ 108. 132. 182. 268. 375. 595
Erebouni............. 98. 145. 181. 260. 374. 621
Shengavit........... 108. 144. 207. 314. 439. 664
Davidashen.......... 110. 168. 227. 321. 455. 683
Ajapniak............ 100. 146. 205. 302. 413. 641
Malatia-Sebastia..... 98. 141. 204. 294. 401. 606
Nubarashen........... 50.. 63.. 81. 152. 260. 346
Yerevan*................. 174. 230. 333. 473. 706
* without New Marash

Drams per USD....... 573. 579. 533. 458. 416. 354

Source: Cadastre Commission with some adjustments as reported on aea and my own.

One final word. I am very impressed by the timeliness and quantity of information (prices and number of transactions) reported by the Cadastre Commission on its updated website. It is worth a visit -- you need Armenian fonts (with few exceptions). As in my previous postings, it would be good to see more research in this area.

5 comments:

Anonymous said...

Would you mind sharing the URL of the Cadastre site.

Thanks in advance.

David said...

It's dot am.
It will be good to share whatever analyses you undertake.

nazarian said...

dot.am is a squatter site.

David said...

i meant cadastre dot am

hayk said...

Many people believe that Yerevan apartment pricing is another bubble (like tulip business in Holland in the last century or so), that won't last long.
Personally, I agree that as an asset those buildings shouldn't cost that much. Sometimes, the price of a three bedroom apartment in first, second, or even third ring of the Kentron district is equivalent to 2000 sq feet HOUSE in the US towns (say outside of Seattle). But, as it says in the famous soviet times movie (Zolotoy Telyonok) "this is not the Rio de Janeiro!" i.e., Yerevan, regardless how much we love it, is not the dream city of all Armenians.
However, as far as the demand stays there, prices will not decrease. As far as bubble goes, I think that with the mortgage offerings from many banks, the prices will either stay flat or increase little bit more. I have heard that the mortgage offers are not really affordable to many, but I am sure they will add a lot to the existing demand. At the bad end, they will at least keep the demand steady, if not increasing.
One of my friends told me that "influential" folks who own most of the new apartments/constructions, are trying to keep the price of the old building apartments very close to that of newly constructed ones (because of recent slow down in new apts sales) in order to keep steady demand for their new apartments. I guess it makes sense, but the source of information is not that reliable. If anybody know more on this, please comment.

One thing I have to mention is that this summer I noticed (in Yerevan) that almost nobody was aware of US-Iran tensions. The effects of the possible war on housing market can be positive or negative, it's kind of unpredictable. More Armenians and/or Iranians will enter the country, thus increasing existing housing demand, or the conflict will "scare away" many Diasporan Armenians or others who were planning to own an apartment in Yerevan. As a result, it is possible that many people will start selling their apartments, i.e. the demand drops way bellow the supply... What this will mean is that the bubble will blow up...
Personally, I think that the first effect is more likely to occur - many Iranians Armenians will be forced to move back... more demand... at least steady or increasing housing market.
Anyway, for right now, I am very curious what will happen after the elections...