This year the tendency of buying apartments in the newly built buildings of Yerevan is unexpectedly going down. Instead of that, the prices of apartments in old buildings are growing. Especially those apartments are growing in the prices that were built in the tenure of Stalin since they are considered stronger than the other ones. Specialists say that the offer of new apartments in Yerevan is growing by 20-30% per year. It is the reason why those prices do not grow; in some cases, they may be reduced. The head of VVP real estate agency, Vruyr Penesyan, says the same about the existing tendencies in this market.
Several years ago, when they started the widespread construction of new high quality buildings in the center of Yerevan, it was expected that in a couple of years there would be extra supply but not adequate demand in this market. However, the process was the vice versa, since after the collapse of the Soviet Union there weren’t any new buildings and the demand for that product was growing. The reason that the demand does not correspond with the relative supply is the fact that the prices are too high. The prices in the center of Yerevan and as well as in the Northern Prospect are in the range of $1.500-2.000 per cm. In remote territories in the center, the prices are lower: $1.000-1.500 per cm. Besides that, in new buildings, the space of apartments is much more than in the buildings of the Soviet times, that is why the prices for apartments in new buildings are so high. For instance, an apartment with three rooms may cost $100.000 – 200.000. Very few people in Yerevan are able to pay such money. Mostly these apartments are sold to Diaspora Armenians, who are ready to pay big money to buy the apartments they like. In that way, they transform their capital in real estate property to escape any possible inflation. In a word, the new buildings have clients, however, do not solve the problem. That is the reason why the prices for those apartments are not growing so rapidly as in the recent years.
According to V. Panesyan, now people pay more attention to the internal design and quality of apartments. Besides that, he says that it is very important whether the apartment opens a view to the Ararat Mountain or not. This is what Diaspora Armenians care about and what makes the domestic businessmen make money. Even it is said that many Diaspora Armenians buy apartments in Yerevan due to the view to the mountain only. This view to the Ararat Mountain makes the prices of apartments high by 20%. Nevertheless, people that are buying such apartments don’t realize that next year another building will be built very close to their building, which will close their view to the Mountain. It means that if later they want to sell their apartments, they will not be able to sell for the money they have paid for it. If they lose the view to the mountain, they will lose 20% of the price they have paid for the apartment. In other words, this tendency will be beneficial only for the businesses that are making construction and for real estate agencies.
The prices in the real estate market will not grow much in the coming two years. Concerning the mentioned fact V. Panosyan says that the reason is the fact that it is a pre-election period, “The reason is the fact that it is a pre-election period. Always the prices stop growing before elections. If there is a political serious change during the elections, the prices will fall down rapidly. However, if the situation becomes stabile after the elections again, the prices will continue growing again”.
There are few factors that may make the prices for real estate go down, however, there are many of those that may make it go up. There are foreign factors among the mentioned factors as well. Furthermore, whenever the president of the U.S.A., George Bush says something concerning Iran, the prices are growing in our country; Armenians from Iran are buying apartments here. The same thing is happening when there is pressure on Armenians in Russia. The most amazing thing is the fact that when there are no such foreign factors influencing on the prices, the prices do not go down. In addition, there are other small reasons inside the country, thus as a result of these processes it turns out that the prices are growing all the time. Besides that, those factors may be artificial as well, i.e. may be stipulated by market participants such as brokers and cadastres. Brokers increase the prices artificially so that they can make more money since they have 1,5 – 2% in the prices. As for cadastres, it is said that oligarchs make them to register information that there is growth in the market so that they can make people hurry to buy apartments.
Our country is small and small factors such as gasification in districts and other factors may change the prices. The market is too small and thus everything may influence on the prices.
Specialists say that besides the view to Mountain Ararat, the Armenian mentality may influence on the prices as well. If there are powerful people that live a building, the neighbors increase the prices for their apartments. If there are several powerful people in one building, it is considered an elite building and the prices are going up rapidly. Such factors may have their influence on the neighboring buildings as well.