Trends and growth opportunities in the office real estate market: exploring new strategies and distinctive features shaping the industry.

Uzbekistan, Tashkent – According to AN Podrobno.uz, the previous year marked a significant turning point for the office rental market. Numerous new buildings quickly entered the market, with some being offered without finishing work. However, tenants are increasingly demanding high-quality spaces: spacious and well-lit areas that allow for flexible organization of work zones are highly valued. Offices that are ready for immediate use without the need for additional repairs or design work are particularly sought after. Nonetheless, the most important criteria for a convenient office remain its proximity to the metro, the availability of restaurants and cafes within walking distance, and the quality of service provided by the management company. Andrey Sadykov, the head of the Realting.uz website, shares insights on the development of the domestic commercial real estate market, expectations for 2025, and some nuances in legislation.

https://podrobno.uz/cat/economic/osobennosti-rynka-ofisnoy-nedvizhimosti-novye-strategii-trendy-i-tochki-rosta/2025-02-26 08:12:42

Segment A

Premium offices have maintained stability but are facing an increase in vacancy rates: the level of available space rose from 17.6% in 2023 to 58.2% in 2024. This is attributed to the introduction of new business centers, many of which are yet to be operational. The total supply in the segment reached 262,000 square meters, including private spaces. However, demand for such offices remains high, particularly among international companies. The average rental rate in Class A segment increased to $34.3 per square meter per month, which is 3.6% higher compared to 2023.

Segment B

The budget segment – comfortable offices at affordable prices – continues to be the most popular. Banks, telecom companies, and private firms are the primary tenants. Last year, rental prices in this segment rose from $21.8 to $24 per square meter. The total supply in the segment reached 392,000 square meters. A significant rise in vacancy rates at the beginning of the year was due to the reassessment of classification criteria for several properties: some offices previously classified as Class A were reclassified as Class B.

What Influences Office Rental Prices?

The office real estate market in Tashkent is rapidly evolving, but behind the external growth lie nuances that shape its specifics. Let’s examine the key factors influencing fluctuations in demand, supply, and rental rates.

1. Location and Transportation Accessibility

Location remains the primary criterion for choosing an office. However, not all business centers meet client expectations. For instance, the increasing traffic congestion in the city center makes access to some new properties inconvenient, reducing their appeal.

Meanwhile, business centers on the outskirts with good parking zones and proximity to the metro are becoming more popular, especially among companies targeting employees living in suburban areas.

2. Quality of Infrastructure and Additional Services

Modern air conditioning systems, energy-efficient lighting, and well-designed workspaces have become standard.
Business centers that offer coworking spaces, conference rooms, relaxation areas, and cafeterias have an advantage, especially among international tenants.

3. The "Gray" Office Market

In addition to the official rental market, an active "shadow" segment persists in Tashkent. Private landlords often provide spaces without documentation, offering rates below market value. This attracts small companies but adds extra pressure on the "white" office market, decreasing demand.

Taxes and "White" Contracts: A Legal Dilemma

One of the pressing issues remains taxation in the commercial real estate segment. Today, many individuals renting out offices have started to sign "white" contracts with legal entities. This is undoubtedly a positive step towards transparency. However, there is a nuance: landlords often shift the tax burden onto tenants.

How does this work?

According to Uzbek legislation, if a landlord (an individual) does not pay income tax, the tax is levied on the tenant (a legal entity). Thus, the company renting the space is effectively forced to pay for the landlord's lack of integrity.

Why is this a problem?

This system creates unequal conditions for tenants, particularly for small and medium-sized businesses that face additional expenses. It diminishes the attractiveness of commercial real estate for international tenants accustomed to operating under standards where tax liabilities rest with the property owner.

Experts believe the situation requires reevaluation. The legislative framework should encourage transparency in transactions rather than complicate them.

What to Expect in 2025?

In the upcoming year, the following prospects can be highlighted:

Further development of premium properties.
International companies will continue to drive demand for Class A+ offices with high standards.
New technological solutions.
Automation of building management processes, energy-saving technologies, and digitization of rental processes will become significant competitive advantages.
Reduction of the "shadow" segment.
With tighter controls and simplified registration rules, part of the "shadow" market will begin transitioning to the official segment.

Expected changes:

Decrease in the number of "gray" rental contracts.
Introduction of mandatory registration requirements for contracts, protecting tenants from risks.

The year 2025 promises to be eventful for the office real estate market in Tashkent. Increased competition, the implementation of new technologies, and legislative reforms will create more favorable conditions for tenants and investors. A crucial task remains the refinement of the legal framework to ensure a balance of interests among all market participants and promote its sustainable development.