Azerbaijan’s next real-estate boom may be measured less in square metres than in destinations, as developers and officials seek to move beyond the apartment-building model towards entire neighbourhoods, resorts and urban districts designed to combine housing, tourism, retail and infrastructure.

That shift was one of the clearest themes to emerge from a discussion on real estate, tourism and urban development at the Azerbaijan International Investment Forum in Baku, where developers argued that the country’s property market is becoming increasingly dependent on the quality of the places built around individual assets. “The square metre itself isn’t a project anymore,” said Ali Huseynov, chairman of Avant Group. “The project is neighbourhood. The project is lifestyle. The project is cost of living.”

A decade ago, Huseynov said, a potential buyer might have asked little more than the price and location of an apartment. Today investors want to know who will manage a development, when they will receive title, what rental returns might be, how they can exit and whether schools, parks, shops, transport and healthcare will exist around it.

The transformation mirrors a broader change in Azerbaijan’s development model. After years of rapid construction in Baku, officials are placing more emphasis on long-term master planning, mixed-use districts and tourism projects intended to create destinations rather than isolated buildings.

“Investors do not invest in buildings alone,” Anar Guliyev, chairman of the State Committee for Urban Planning and Architecture, told the forum. “They invest in places, markets and future potential.”

Azerbaijan has updated long-term master plans for 68 of its 79 cities, according to the State Committee, while work continues on the remainder. Baku’s own 2040 master plan covers 212,300 hectares and envisages a more polycentric capital with transport, social infrastructure, green space and environmental rehabilitation planned alongside new construction. 

The approach is visible in Baku White City, the redevelopment of the heavily polluted former industrial district historically known as Black City. The project has sought to combine environmental remediation with housing, offices, retail, public space and pedestrian areas rather than treating the land simply as a collection of building plots.

For government planners, the economic argument is that clearer planning makes capital easier to attract. Developers can assess density, transport, infrastructure and the character of surrounding districts before committing money, reducing uncertainty around projects that may take years to complete.

The private sector is pushing the concept further. Emin Agalarov, founder of the Sea Breeze development on the Caspian coast outside Baku, said his 18 sq km project began with a conventional property model before evolving into something much larger. “Initially, we were selling square metres, but then we transformed,” he said. “Instead of selling square metres, we’re selling a lifestyle now.”

Agalarov said only about 10-15% of Sea Breeze’s ultimate development ambition had so far been completed. The project is being positioned as a new urban destination incorporating residences, hotels, restaurants, leisure facilities and international brands, with further expansion planned over the next seven or eight years.

Sea Breeze has signed roughly 20 agreements with international brands, according to Agalarov, who argued that securing prestigious names helped establish confidence in the wider project.

“If you have a Louis Vuitton store, then you can have all the Chanels and Pradas next to it,” he said, drawing an analogy between luxury retail and real-estate development. Once the first international names arrive, attracting others becomes easier.

The aim, he said, was also to bring other developers into the master plan rather than keep the entire project under one company. “I don’t want to be the only person building in Sea Breeze with my team,” he said. “I want credible developers joining my master plan.”

Tourism policy is increasingly being folded into the same investment strategy. Fuad Naghiyev, chairman of Azerbaijan’s State Tourism Agency, said tourism generated about AZN7bn ($4.1bn) in added value in 2025, accounting for approximately 5.4% of the economy, while tourism services brought in around $2bn in foreign-currency revenues.

The government in August approved a tourism development programme for 2026-2030 aimed at improving the investment environment, developing tourism in the regions and strengthening branding and marketing. 

Naghiyev said measures envisaged included interest-rate subsidies for manat-denominated loans financing hotels, resorts, winter-sports facilities and congress venues, alongside support for air connections and tourism infrastructure.

The shift effectively brings tourism promotion and property investment closer together. Rather than focusing solely on increasing visitor numbers, the government wants capital to flow into the infrastructure that allows visitors to stay longer and spend more.

That creates opportunities outside Baku, including mountain resorts, heritage sites and the reconstruction of Karabakh and East Zangezur, where large-scale urban planning is taking place alongside transport, renewable energy and tourism development. 

But the model carries risks. Rising property values may please developers while making cities less affordable for residents. Huseynov told the forum that rents in Baku rose by about 13% in 2025 and property prices by around 14%, figures he said were creating pressure for more flexible payment models and smaller, more efficient layouts.

Tourism can create a similar tension. Anna Soave, head of UN-Habitat’s Azerbaijan programme, warned that historic districts risk losing the communities that make them attractive if housing is converted extensively into short-term accommodation.

If residents are pushed out, she said, “with them goes the life that visitors came to see”. Her argument was that the success of tourism should not be judged only by arrival numbers but by the value visitors generate for local economies, how long they remain and whether communities benefit.

That caution is particularly relevant as Azerbaijan seeks to turn increasingly large developments into branded destinations. The challenge will be to ensure that master planning creates functioning urban environments rather than simply more sophisticated property products.

For developers, however, the direction of travel appears clear. Buyers increasingly want confidence in what surrounds a building as much as in the building itself, while international investors want predictable planning, management and infrastructure.

Azerbaijan’s next phase of property development is therefore becoming less about constructing individual assets and more about producing complete places. After a building boom that changed Baku’s skyline, the harder task is to build neighbourhoods and destinations that people still want to inhabit after the cranes have gone.