Savings, investments, and returns: Should you invest in real estate or savings accounts?

The core essence of such investments lies in the fact that property generates income from two sources: rental income and capital gains (losses) from changes in property value over time.

These two sources not only generate income simultaneously but also enable the investor to adapt to market changes.

In Tashkent, the profitability of real estate investments is declining. Specifically, in January 2024, the return on investments in multi-apartment buildings in the capital decreased from 32.4% in February 2024 to 7.6%.

During this period, the return on investments in multi-apartment buildings varied significantly depending on the district and the number of rooms: 1-room: Mirabad – -1.7% (February 2024 – 53.0%), Bektemir – 54.3% (46.8%); 2-room: Uchtepa – 2.6% (27.0%), Yakkasaray – 15.1% (24.2%); 3-room: Bektemir – -5.5% (33.7%), Yakkasaray – 10.4% (22.8%); 4-room: Bektemir – -7.3% (37.9%), Chilonzor – 16.5% (19.8%).

Returns from changes in property prices. In February 2024, the potential profit from price changes in real estate and rent in the Yakkasaray, Bektemir, and Chilonzor districts averaged 16.1%, 26.9%, and 15.4%, respectively, while in January 2025, these figures dropped to 3.0%, 2.8%, and 0.3%. Additionally, in Tashkent, due to the near halt in property price growth and their slight decline in January of this year, profits from property price changes significantly decreased in the Shaykhantahur district (from 35.8% to -0.8%) and Yunusabad (from 30.4% to -3.4%).

Returns from residential rental income. In January 2024, the annual average return from residential rentals in the Mirabad district was 10.0% (10.4% in February 2024), in the Mirzo-Ulugbek district – 9.9% (10.6%), and in the Shaykhantahur district – 9.8% (11.6%). These figures were lower in areas with lower rental prices, such as Olmazor – 8.9% (9.4%), Uchtepa – 8.9% (8.6%), and Sergeli – 8.9% (8.4%).

Returns on investment projects with high investment attractiveness for 1 and 2-room apartments are also declining. In February 2024, the return on investments in 1 and 2-room apartments was 35.6% and 30.8%, respectively, while in January of the current year, these figures fell to 14.3% and 7.5%. During this time, the return for 3 and 4-room apartments significantly decreased (to 5.5% (from 33.0% in February 2024) and 2.9% (from 30.3%)).

Since mid-2024, the returns on real estate investments have been lower than the returns on deposits in the national currency for individuals. In 2023-2024, the average interest rate on foreign currency deposits was around 5%, while rates on national currency deposits ranged from 21% to 22%.

In developing countries, directing household savings into real estate can temporarily enhance socio-economic stability. However, in the long term, it is crucial to develop capital markets and provide the population with diversified investment opportunities. Thus, household savings are not only preserved but also, by investing in various sectors of the national economy, facilitate faster growth.