Investing in Azerbaijan as a Retirement Income Strategy 2026 | Merkaz HaNechasim

One question that comes up more and more among investors aged 55 and older is how to diversify income sources ahead of retirement, beyond a pension and traditional retirement savings. Investing in Azerbaijan, and specifically investing in Baku, is now being considered by some of them as an additional layer in their planning — a tangible asset that can generate ongoing income or serve as a future source of liquidity, alongside their other savings vehicles.

Why investors approaching retirement are looking specifically at Baku

Tangible real estate gives many people a sense of security that's hard to get from the capital markets alone, especially as they approach retirement age and want less volatility. Investing in Azerbaijan offers entry at relatively accessible amounts compared to Western real-estate destinations, alongside documented growth figures in the market — a price increase of about 14%-15% in 2024 according to ABB Bank. For someone looking for a property that can grow in value throughout their retirement years, this is a significant consideration.

Rental income as a supplement to a pension

A rented property in Baku could, theoretically, serve as an additional source of ongoing income — but it's very important to be precise: there is currently no official, verified rental-yield figure in the market, so percentages presented in marketing should not be relied upon without independent verification. An investor planning for retirement age should build a conservative scenario, not an overly optimistic one, so that the decision remains responsible even if actual income turns out lower than expected.

Risks that are especially important to plan for at this age

The closer one gets to retirement, the shorter the time available to recover from an investment mistake — which is why it's especially important to carry out thorough due diligence before any investment in Azerbaijan: verifying who the real developer is, that the property is legally registered, and that there are no unrealistic yield promises. It's also worth factoring in currency risk (shekel-dollar-manat) and planning how it affects ongoing income over the long term.

Building a gradual property portfolio, not a one-time gamble

The most responsible approach to investing in Baku ahead of retirement is gradual: start with one property, learn the market, and only later consider expanding — rather than moving a large one-time sum from all your savings into a single property in a foreign country. Diversifying across several properties, or combining with other savings vehicles, reduces overall risk.

Taxation of rental income for an Israeli retiree

Anyone planning to use rental income from an investment in Azerbaijan as a supplement to their pension should check their tax liability in advance — both in Azerbaijan and in Israel, including examining whether a tax treaty exists between the two countries to avoid double taxation. Proper tax planning in advance, with the guidance of an accountant familiar with both systems, is an integral part of responsible retirement planning.

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