Foreign interest in Armenia's real estate market declines: Analysis
Armenia’s real estate market
Interest from foreigners in purchasing real estate in Armenia has recently declined, according to the latest official data. However, local realtors believe that the official statistics do not fully reflect the actual situation. Experts explain that the statistics often overlook properties that have already been purchased in developments where construction is still ongoing.
Despite this, experts agree that foreign investments in Armenia’s real estate market have a positive impact on the country’s economy. They also suggest ways to generate additional interest and stimulate the sector.
A closer look at the latest dynamics in Armenia’s real estate market and the trends shaping its future.
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«We don’t want to lose our connection to Armenia, and we want a place to call our own»
Karen Durgaryan, a U.S. citizen, is one of those living abroad who decided to purchase property in Armenia.
Over the past two years, Karen bought two apartments in new developments, choosing areas in Yerevan suitable for both personal living and rental income.
He cites two reasons for his purchases:
«First, we want to maintain a connection to Armenia, and having a place here helps. Second, if there’s an opportunity to invest, why not do it in Armenia?»
Karen manages the U.S. branch of the real estate company RED Invest Group. Through this work, Armenians in the U.S. have been buying property in Armenia, investing over four million dollars in the past two years. These investments will continue in the coming years through mortgage payments.
Who is buying property in Armenia?
According to the Statistical Committee, foreign nationals purchased 1,645 properties in Armenia in 2023, a decrease of 15.6% from the previous year. Over the past five years, 2022 saw the highest number of transactions by foreigners, with 1,950 deals.
In 2023, the majority of buyers (66.6%) were Russian citizens.
American citizens ranked second, purchasing 155 properties, which accounts for 9.5% of all transactions. Their interest and the number of deals had been growing between 2019 and 2022, reaching up to 245, but this figure dropped in 2023.
Citizens of European countries also bought fewer properties, with 200 transactions in 2023 compared to 250 in 2021-2022.
A similar trend is seen among citizens of CIS countries, with 55 deals in 2023, down from 68 in 2019.
“Official statistics don’t tell the whole story”
The data published by the Statistical Committee doesn’t fully capture the market situation, according to economist and founder of RED Invest Group, Arsen Avetisyan:
“The statistics are somewhat skewed. Let me explain. If you buy an apartment in a building under construction today, but the completion certificate will only be issued in two years, this transaction will only appear in the cadastral records and statistics after two years. In other words, developers are selling apartments today, but the sale will only be reflected in the statistics once the building is completed—several years later.“
Economist Suren Parsyan considers this a reasonable approach:
“In the case of purchasing an apartment in an unfinished building on the primary market, a sale agreement is signed, but we can’t consider this as acquiring an apartment.“
“The Cadastre Committee analyzes the statistics of real estate transactions for properties that have been completed, not transactions for the right to acquire housing“, clarifies Aram Gugarats, Deputy Head of the Real Estate Cadastre Committee.
Foreign property owners in Armenia: Mostly Armenians
“The majority of foreign nationals purchasing real estate in Armenia are ethnic Armenians who are citizens of other countries. These are people who prefer to own an apartment in Armenia rather than rent one, especially if they plan to stay for an extended period, such as for studies, or even during short visits,” says Arsen Avetisyan, head of RED Invest Group.
In 2023, among European buyers of real estate in Armenia, most came from Germany, the Netherlands, and France.
From the former Soviet republics, 29 Ukrainian citizens, 12 Georgian citizens, and 10 Kazakh citizens bought property in Armenia last year.
There were also real estate transactions involving citizens of Lebanon (14), Canada (12), and the UAE (13).
Azerbaijani and Turkish citizens purchasing apartments in Armenia
In recent years, Azerbaijani and Turkish citizens have also been purchasing real estate in Armenia, according to the Cadastral Committee.
Azerbaijani citizens have acquired four properties in Armenia over the past five years—two in 2019 and two more in 2022.
Turkish citizens have purchased 42 properties in recent years. The breakdown of transactions by year is as follows:
2019: 18 properties
2020: 2 properties
2021: 8 properties
2022: 11 properties
2023: 3 properties
Foreigners prefer to buy apartments and land in Armenia
In 2023, foreigners purchased 738 apartments in Armenia. For comparison, there were more transactions in 2022, with 991 apartments bought, while in 2019, the number was significantly lower at 331.
Since last year, foreigners have shown less interest in private houses, industrial properties, and public buildings.
However, demand for land plots has increased over the past five years. In 2023, foreigners bought 362 plots, compared to 147 in 2019.
Realtors attribute this growing interest to the increased demand and supply for purchasing land for business or construction purposes.
Economist Suren Parsyan confirms the demand for land but notes that it primarily involves large plots:
“Few foreigners are buying land to build, for example, private homes. Most are purchasing land as an investment, with the intent to resell it at a higher price later.”
Buyers are not interested in agricultural land at all. While 22 agricultural plots were purchased between 2019 and 2022, this figure dropped to zero in 2023.
Parsyan believes that Armenia should actively encourage foreign investment in its real estate market. He points out that neighboring Georgia is quite proactive in this area, offering more affordable residential property prices and incentives for developers, thus creating a favorable investment environment.
Given these circumstances, along with rising housing prices and the ongoing security threats in the country, Parsyan suggests that Armenia is becoming less attractive to foreigners.
How to make the real estate market more attractive to foreigners? Experts’ suggestions
Arsen Avetisyan (Economist, director of RED Invest Group):
“One of the most crucial tasks is to provide comprehensive official statistics. Foreign investors are convinced by numbers; they need accurate data. If the figures are precise, companies like ours can present the situation in a more compelling and convincing manner.
It’s important to look at successful international practices and implement state-level programs that will make the real estate market more appealing for private investment.
It is also important to activate players in the real estate market. Real estate agencies should work more proactively, strengthen their connections with foreign partners, and showcase the advantages of the Armenian market.
By leveraging these three components, real estate in Armenia can become more attractive.”
Suren Parsyan (Economist):
“I believe it would be beneficial to attract foreign developers to the real estate market. They would find it easier to sell the homes they build to citizens of their own countries.
If we have foreign developers, their fellow citizens will also become buyers. Otherwise, it’s much harder to attract foreigners.”
Karen Durgaryan (Director of the U.S. branch of RED Invest Group):
“As an Armenian living in the U.S., I think the Armenian authorities should use all available means to raise awareness among Armenians living abroad and foreigners. For example, they could distribute educational programs and videos. It would be very helpful to broadcast these on Public Television, which is accessible to the diaspora.
While we, as a company specializing in this field, try to keep people informed, it’s different when the state takes on this role.
Our clients often ask, ‘Who else benefits from my investment besides me?’ This question is particularly important to Armenians by nationality. In response, we emphasize that the country, the builder, and dozens or even hundreds of workers all benefit.
When someone buys an apartment in a new building, they pay value-added tax, which goes into the Armenian state budget. The developer pays their workers, and the company earns a profit that is reinvested in the country. So, everyone benefits. Our slogan is: ‘The property you buy belongs only to you, but the money you invest benefits hundreds.'”
