By evicting tenants, land is sold at a fabulous price

In the center of Baku, in the “Soviet” housing estate of the Yasamal district, this month Another quarter of old houses was demolished in the  center of Baku in Sovetskaya Street. The state paid 1,500 manats per square meter of rented housing to dissatisfied owners.

In the same days, a scanned image of an advertisement for the sale of land in Sovetstaka appeared on Facebook (see photo). An intermediary named Ramal offers a plot of 20 acres, next to the new road, at a price of 8 million 160 thousand manats, or one square meter for 4080 manats. The difference between the amounts paid to the owners of houses in Sovetskaya Street, and put up for sale by the same land 2.5 times. It should be added that in reality, as the former residents of this territory report, they were paid less than 1,500 manats, justifying the absence of legal documents for courtyard buildings and other non-residential premises. Sevinj Huseynova, evicted from the “Soviet” state, reported that for a house of 100 square meters she owned, “with a scandal” she received only 130 thousand manats - 1300 manats per square meter.

Turan checked the accuracy of the land sale announcement by calling the three numbers indicated on it. Ramal, who answered the call, said the ad was valid, but was advertised last year. The land belonged to a private person, and then it was sold; the intermediary answered the clarifying question.

"It is a shame. People are told that the compensation issued at 1,500 manat per sq. m is the highest and corresponds to the market value of the land. How it is that someone buys for a thousand and a half quickly privatizes and only sells land without buildings, sells for 4080 manat,” another reader wrote under this announcement.

To be exact, we will inform that 4080 manats per square meter is an offer. At what price this land is bought back unknown. Perhaps the parties agreed at a lower price. There is a reason to think so. Baku resident Saftar Gazanfaroglu reports that last year, near the Elmler Akadimiyası metro station, a 15-minute walk from Sovetskaya, one hundred square meters of land was sold for 391,000 manat - that is, 3,900 manat per 1 sq.m. The difference from 4,080 manat is not significant.

Gazanfaroglu is convinced that the sale of land in the Sovetskaya Street on behalf of an individual does not mean that the owner is really a certain businessperson who is buying and selling land. In the central regions of Baku, only large officials are able to carry out such transactions, entrusting the mission of the contractor to private individuals.

The economist Shahmar Agabalaev in an interview for Turan noted that selling land to commercial structures at a market price with such a difference between purchase and sale prices creates social discontent among the population. The second negative point is that society does not know how the final buyer will use the territory. Will our city beautify his project? In such cases, it is more rational for the state to sell land through a tender for a specific project.

The economist  believes that it is  wrong to buy back the old housing from the population for money, since the population in this model of relations is always dissatisfied with the amount offered to it (in this case, 1,500 manats per sq.m) and the assessment of the real estate leased out. It may also happen that because of age or illness someone will not be able to buy housing with the money raised, or will spend money on other primary needs, and may be left without a house. In the best case, people spend the money they receive to repair other housing, this takes away a lot of nerves and energy from citizens and again causes massive discontent.

Agabalaev suggests recalling the Soviet model, when the state offered apartments to residents of demolished houses in the same Sovetskaya Strteet. Related families living next door in old one-story courtyard blocks received apartments in the same house. That is, if three families lived in a three-room old house, then in a new place each family received a separate apartment, built ready for living. Family ties were not broken. In reality, compensation was by two or three times more in price terms than these people had in their former location. People did not tear themselves away from their native urban area, relatives in the new house continued to live nearby.

“We can give another positive example from the experience of today's Moscow. An innovative city improvement project is also being implemented there. For this, the old houses called Khrushchevka are demolished and new multi-storey buildings are being built, in which the owner is offered a new apartment within a kilometer radius of his house. The citizen retains the right to move into a new house, which will be built on the site of his former life,” the expert added.

Another important issue is the conditional minimum amount of 1,500 manats per square meter of housing commissioned by the state, which the state pays to citizens and private construction companies that take this figure as a basis. As it turns out, then this piece of land is set at a market price by two times more expensive. Does this mean that the state is deceiving property owners by setting an underestimated bar?

“I am not happy with determining in a mandatory manner the value of rented housing. It is very difficult to find the middle price line. The market situation is changing rapidly. Today's price will not be profitable tomorrow. With the price option, there are many loopholes for speculation, depending on the condition of the apartment and its place in the city. Therefore, it is better to choose the Moscow option.”