Real estate market index
Azerbaijan does not officially publish a domestic house price index (HPI) comparable to those released in Europe and North America. For the purposes of our analysis it is therefore constructed from official statistical data using a hybrid model. Azerbaijan's real estate market is currently in a sustained upward cycle, with no signs of a sharp correction.
After the accelerated growth of 2022–2024, 2025 saw a trend towards slower growth rates while the dynamics remained positive, indicating a shift from recovery-driven growth to a more mature market phase. The index trajectory reflects structural demand drivers — urbanisation, rising incomes and a limited supply of quality assets — with no signs of speculative overheating.
Number of transactions
The 2025 data confirm sustained growth in transaction activity on Azerbaijan's real estate market. After the recovery period of 2020–2022, the market moved into an expansion phase in which rising transaction volumes are accompanied by rising prices, but without signs of overheating. The moderate slowdown in growth rates in 2025 points to a shift towards a more mature stage of the cycle, in which demand remains strong — driven by urbanisation, internal migration and a limited supply of quality housing, particularly in Baku and its metropolitan area.
Average price per square metre
The rise in the average price per square metre in 2025 confirms that the market is in a phase of sustained price growth — albeit with early signs of normalisation after the accelerated growth of 2022–2024. The price growth observed in 2025 is fundamentally driven: it is underpinned by higher transaction activity, a limited supply of liquid assets and the concentration of demand in Baku. This is not a speculative spike but a structural price shift, typical of markets entering a mature stage of the cycle.
Rental yield
The 2025 picture highlights an imbalance between the capital and the regions that is classic for an emerging market: Baku remains the price leader but shows the lowest rental yield, whereas second-tier cities — Sheki, Mingachevir and Ganja — offer higher yields at a significantly lower entry threshold. This confirms that Azerbaijan's market is increasingly segmenting into a capital-city market focused on capital preservation and a regional market oriented towards yield — a distinction worth taking carefully into account when building investment strategies.
By the end of 2025 Azerbaijan's real estate market had firmly settled into a phase of structural growth with a gradual normalisation of its dynamics. Price growth and rising transaction volumes moved in parallel, pointing to balanced market dynamics without signs of speculative overheating. The main growth driver remains Baku and its metropolitan area, where both solvent demand and a shortage of quality supply are concentrated.
The rise in the average price per square metre was accompanied by a broadening transaction base, which further confirms the fundamental nature of the upswing. Regional markets recorded more moderate price growth but continue to offer attractive rental yields, reinforcing the clear segmentation of the market between a capital-city market of capital preservation and a yield-oriented regional market.
In 2026 the market is expected to move into a phase of slower but sustained growth. Price dynamics are forecast in the range of 5–8% year on year: Baku will continue to lead in absolute price levels, while regional cities are likely to look more attractive in terms of yield and risk-return profile.
Transaction volumes are expected to stabilise with moderate growth, supported by domestic demand and investment purchases. The key risks will be the limited supply of liquid assets in the capital and potential pressure on yields amid accelerated price growth.
Overall, Azerbaijan's real estate market in 2026 will be characterised by high predictability, moderate yields and strong appeal for medium- and long-term investment focused on capital preservation and steady asset value appreciation.
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