Apartments in Tajikistan may become more expensive as early as summer

After the devastating earthquakes in Turkey, demand grew for Russian building materials, which Tajik builders also import from there, and the import of decorative components from Turkey decreased, which has already affected their prices in Tajikistan. 

True, this has not yet affected the cost per square meter.

What has changed?

Developers and their suppliers of building materials give an example of how unexpected events have already affected the construction market of an entire region.

In February 2021, in the southern regions of Uzbekistan - the Syrdarya and Surkhandarya regions - the volume of construction increased sharply after the pandemic. At that time this entailed an increase in the prices of building materials (cement and rebar) on the Central Asian market, which, in turn, led to a rise in real estate prices in Tajikistan.

Uzbek entrepreneurs imported cement from Tajikistan in enormous volumes and bought up the rebar imported by Tajik entrepreneurs for domestic developers.

"At that time our company had already concluded a contract with the Russian side for the supply of rebar to Tajikistan. As soon as the cargo was put on the rails, we received an attractive offer from Uzbek partners. Usually, when rebar is supplied from Russia to Tajikistan, it takes from 3 months to 2 years to sell the goods, but here the Uzbeks offered a favorable price and we sold the entire volume in three days", - recounts Tajik entrepreneur Ikrom Vahidov. 

According to him, the Uzbeks at that time offered a much higher price than the one for which they could have sold the goods in Tajikistan. And the company where he worked was not the only one that redirected cargo to Uzbekistan. 

It is precisely such steps from rebar suppliers that construction companies now fear. Owing to the fact that reconstruction work after the earthquakes is now underway in Turkey and Syria, building materials are being massively supplied there, which, in turn, leads to a rise in their prices on the world market. 

Prices have not yet been raised, but dealers of metallurgical companies and finished metal building materials have already notified their partners of a possible increase in the middle of the second quarter (in May) of this year.  

"Rebar for high-rises with a diameter of 22 millimeters and up is brought to us from Russia and Kazakhstan. Rebar is also produced in Tajikistan, but from recycled metal and up to 17 millimeters in diameter - it is not suitable for the construction of high-rise buildings. Such rebar either has too high a flexibility or too high a hardness", - explains Ikrom Vahidov.

According to him, domestic rebar is more often used for the construction of schools, hospitals and other structures no higher than five stories.

The construction business is becoming even more unprofitable

According to specialists’ estimates, in a bad scenario - if dealers raise the prices of building materials - the costs of building high-rises could grow by 20 – to 35%, but no one will risk raising the prices of already-built real estate, because demand for real estate is now very low due to the population’s low solvency.

"Therefore developers have no way to cover their costs by raising apartment prices. If before the pandemic it was possible to sell apartments while still at the foundation-pit digging stage, and by the completion of construction they managed to sell more than half the meters, now demand is significantly lower - developers struggle to sell 1-2 apartments a week", - says Muyassar, an employee of one of a capital developer’s sales offices.

In some districts of Dushanbe developers even hold sales, and, as they themselves say, at a loss to themselves. Therefore there is no clear price per square meter now. "Asia-Plus" addressed this question to the SUE «Center for Pricing in the Construction Industry», but received no answer.

"Now, everything is by the principle of "he who seeks shall find". You can officially buy an apartment from a company in a good district, for example, for $400 per square meter, and the same one – in the same district - via the Internet or intermediaries you can now realistically find even for $200-$350", - says a realtor named Khurshed. 

He attributes such a difference between the official price from the developer and resale «secondhand» to the fact that most developers, in order to complete the project on time, exchanged apartments for building materials from suppliers, and those, in turn, often sell the meters at reduced prices. 

According to information on the somon.tj website, approximate prices in the capital’s I. Somoni district range from $860 to $1200 and higher, in the Sino district from $250 to $480, in the Shohmansur district from $750 to $940 and higher, in the Firdavsi district from $330 to $680 per square meter.           

The installation of elevators has become more expensive

The total prime cost per square meter of real estate also includes the costs of installing elevators. 

Suppose you are the developer of a 12-story building. Taking into account the total prime cost of the land, labor, iron, concrete and so on, but without an elevator, your costs per square meter will be $220 per floor. 

Apart from the type of modification (there are ones from China, Russia, Belarus, etc.) and the different cost of elevators - from $1800 to $5 thousand per floor - the installation also depends on the number of stories and the square footage of the structures - the higher the floor, the more cables and components will be required, and the larger the square footage, the greater the lifting power of the elevator motor must be.   

So, for example, for an elevator costing $1800 per floor, on top of the $220 per square meter you need to add another $57.

Before the tragedy in Turkey, some components for elevators (decor, floors, paneling) were delivered from that country; now supplies from there have decreased greatly. 

If previously the developer paid $1800 per floor for the elevator (let us recall, this is the minimum cost) for 12 floors - in total this cost $21,600 - then, according to the representatives of one Turkish elevator installation and servicing company, now he will pay $2 thousand - $2200 per floor, and that is $24 thousand - $26400 in total. And this, incidentally, is plus $8-$8.8 per square meter.  

"The rise in elevator prices also affects the total prime cost per square meter, but developers do not yet raise the price because of this, because the market is already scared by high prices even without it", - an elevator supplier familiar with the situation on the market told "Asia-Plus".

The realtors and developers with whom "Asia-Plus" spoke claim that after the earthquakes in Turkey, prices have not changed much, but developers’ incomes have decreased significantly. And everyone attributes the low purchasing power to the rise in the cost of living. Ordinary citizens have either seen their savings decrease or the growth of their savings for acquiring real estate slow down.  

Source: ASIA-Plus