Azerbaijan has increasingly attracted the attention of foreign investors in recent years, thanks to its promising investment potential. As a result of steps taken to develop the investment and business environment, many foreigners invest in various sectors in Azerbaijan each year.
In this blog post, we will share valuable insights into investment opportunities and general ideas for investing in Azerbaijan. If you need further consultation on investment strategies and plans to ensure successful investments in Azerbaijan, you can contact the DLB Consulting Team. We are confident that our ideas and plans will lead to success in your future investment endeavors.
Reasons to invest in Azerbaijan
Certainly, there are specific reasons that attract foreign investors to consider investing in Azerbaijan. Naturally, these investors take into account key indicators of Azerbaijan’s business and investment environment, as well as socio-cultural factors, when making their decisions. Based on our experience, we would like to share the key reasons why foreigners choose to invest in Azerbaijan:
Strategic Location
Geographically, Azerbaijan is located in the South Caucasus region of Eurasia, connecting Western Asia and Eastern Europe. Thus, the Trans-Caspian East-West Trade and Transit Corridor serves as the main route connecting two large global economies, China and Europe, with an average length of 5,400 km and a transit time of 15 days. Azerbaijan has made significant investments in road and rail links running north-south (from the Russian border to the Iranian border) and east-west (from the Absheron Peninsula to Georgia and then to Turkey), with most projects either completed or well underway.
Robust Economy with Large Domestic and Regional Markets
The current perspective of the economy of the Republic of Azerbaijan can be characterized as “cautiously optimistic.” The economy, which was seriously affected by COVID-19 prevention measures and the drop in global oil prices, has shown a rapid recovery. Consequently, in 2022, Azerbaijan’s foreign trade turnover amounted to 52.6 billion dollars, a 55% increase compared to 2021. The volume of exports in 2022 was almost 2.6 times larger than imports, reaching the highest amount since 2008. Additionally, non-hydrocarbon exports increased by 12% compared to 2021.
Liberal investment climate and skilled labor force
Bilateral investment agreements concluded with foreign investors in Azerbaijan provide additional guarantees to foreign investors. These contracts aim to create a more liberal and favorable investment environment in Azerbaijan.
According to 2022 statistics, 5.2 million people, or 51 percent of the total population, are economically active in Azerbaijan. The unemployment rate is quite low, at only 5.6%. Although the majority of the population is employed by the private sector, the participation of the public sector is also significant at 20.7%. Notably, the literacy rate in the country is exceptionally high, at 99.8%.
Socio-Cultural Environment
Economic indicators are certainly the primary factor that attracts foreigners considering investing in Azerbaijan. However, it is important to note that socio-cultural factors also play a significant role for those contemplating living in Azerbaijan. Every year, thousands of foreigners invest in Azerbaijan to obtain residence permits and move here, motivated by these socio-cultural reasons.
Investment opportunities in Azerbaijan
Especially in recent years, both local and foreign investors have predominantly preferred to invest in the following fields in Azerbaijan:
- Renewable Energy Sector;
- Tourism and Hospitality;
- Information Technology and E-Commerce;
- Real Estate;
- Agriculture and Organic Farming.
Renewable Energy Sector
Azerbaijan is rich in oil and natural gas resources, but there is also a growing interest in renewable energy sources for sustainable development. This shift is due to the country’s abundant natural energy resources beyond just oil and gas reserves. Considering all this, we can confidently assert that investing in the renewable energy sector in Azerbaijan can be a highly profitable idea.
Tourism and Hospitality
If you are considering investing in Azerbaijan, the tourism and hospitality sector is one of the most promising fields. Every year, approximately 2 million foreigners visit Azerbaijan. Considering that these numbers are increasing year by year, it is reasonable to say that investment in the tourism sector can yield good revenue for investors.
Real Estate
The real estate sector in Baku is one of the most promising, not just in Azerbaijan, but in the entire geographical region. Large-scale real estate projects established in the country, such as Sea Breeze and Baku White City, have attracted the attention of investors from all over the world. The thing is, real estate prices in Azerbaijan are less expensive compared to many countries, but they are expected to rise, averaging an increase of 15-20% in some projects. Investing in the real estate sector in Azerbaijan can thus be a highly lucrative opportunity.
Agriculture and Organic Farming
With fertile lands and varied climates, Azerbaijan is ideal for investors planning to invest in agriculture. There is an increasing demand for organic and locally sourced produce among local consumers. Additionally, its strategic location creates opportunities for agricultural exports. Investing in agriculture sector in Azerbaijan, particularly in organic fruits, vegetables, or specialty items like saffron and hazelnuts, can fill a niche in both local and regional markets.
Investing in Azerbaijan with DLB Consulting Guidance
We hope that this blog post has provided you with useful insights regarding the investment opportunities in Azerbaijan. If you need professional legal assistance and consultation to invest in Azerbaijan, please feel free to reach out to DLB Consulting.