TALLINN - An Estonian-owned property developer has announced it would buy a plot of prime real estate outside Baku to lead a residential project that will eventually boast some 900 homes for high-income individuals.
Seaside Residence Baku, a firm owned by private Estonian investors, said it would purchase a 147 hectare area near the capital of Azerbaijan and that the deal was likely to be finalized in August.
Board member Harles Liiv told the Baltic News Service that in order to finance the deal, the firm issued bonds to the tune of 16.4 million euros.
Liiv said the firm also planned to spend $14 million on setting up a communications system for the district, which will bring the total cost of the project to over 400 million kroons (25.6 million euros).
The land is situated 30 kilometers from Baku on the shore of the Caspian Sea and has a beach stretching 1.8 kilometers. In recent years Baku has undergone a construction boom as foreign investors arrive in droves to take part in the new oil extraction frenzy.
The developer will also build all necessary infrastructure, but the houses will be built by buyers themselves, Liiv said.
Seaside Residence Baku officials said that mainly Azeri officials and small businessmen will buy the properties, projecting a sales period of three and a half years.
The firm's bonds were bought mainly by Baltic individuals, Liiv said. The developers themselves acquired one-fifth of the bond issue, which will have a phenomenal annual yield of 60-70 percent, the Baltic News Service reported.
The company will redeem the bonds in July 2011. The issue was managed by Gild Bankers, an investment bank.
Owners of Seaside Residence Baku have till now been doing business mainly on the Bulgarian real estate market.
All business in Azerbaijan revolves around oil, while the economy is expanding fast and entrepreneurs are thriving, Liiv commented. Most foreign investors operate in downtown Baku, he added.