Table of Contents
- Executive Summary: Key Insights for 2025–2030
- Market Overview: Current Trends and Major Players
- Investment Drivers: Economic Growth and Urbanization
- Regional Hotspots: Emerging Cities and Development Zones
- Legal Framework and Property Rights (Refer to: moj.gov.af)
- Taxation, Compliance, and Regulatory Considerations (Refer to: mof.gov.af)
- Foreign Investment Policies and Ownership Rules (Refer to: investinafghanistan.af)
- Risks and Challenges: Political, Security, and Financial Factors
- Key Statistics: Vacancy Rates, Rents, and Transaction Volumes (Refer to: nsia.gov.af)
- Future Outlook: Projections and Strategic Opportunities for 2025–2030
- Sources & References
Executive Summary: Key Insights for 2025–2030
The commercial real estate sector in Afghanistan stands at a critical juncture as the country navigates political transformation and economic uncertainty into 2025 and beyond. Key developments include ongoing urbanization, evolving regulatory frameworks, and shifting investment patterns. The sector’s trajectory is heavily influenced by internal policy changes and the international community’s engagement.
- Regulatory Landscape: Since the change in government in August 2021, Afghanistan’s commercial regulatory framework has undergone significant realignment. The Ministry of Urban Development and Housing and the Afghanistan Investment Facilitation Unit are revising land use and zoning policies to encourage investment and clarify ownership rights, though uncertainty remains in legal enforcement and dispute resolution. Notable is the persistence of the Land Management Law, which outlines procedures for land acquisition, registration, and transfer, but implementation is inconsistent due to ongoing institutional changes (Ministry of Urban Development and Land).
- Compliance and Due Diligence: Investors and businesses face heightened compliance demands, particularly regarding property registration and anti-money laundering practices. The Afghanistan Central Business Registry continues to require documentation for property transactions, but the system is often hampered by administrative delays and legacy data gaps (Afghanistan Central Business Registry & Intellectual Property).
- Market Activity and Key Statistics: Commercial property transactions declined sharply post-2021. As of early 2025, activity is concentrated in Kabul and a handful of provincial capitals. Office occupancy rates remain below pre-2021 levels, while demand for logistics and warehousing space has modestly increased, driven by humanitarian operations and regional trade. Reliable public data is limited, but the Ministry of Economy notes a contraction in urban real estate investment, with private sector participation down by more than 50% compared to 2020 (Ministry of Economy).
- Outlook (2025–2030): The medium-term outlook is cautious. Recovery prospects hinge on greater regulatory certainty, restoration of international banking channels, and macroeconomic stabilization. If legal and security conditions improve, the sector could attract regional investors, especially in logistics, retail, and light industry. However, persistent risks—including unclear property rights enforcement and limited financing options—are expected to constrain growth through 2030 unless substantive reforms are implemented.
In summary, commercial real estate in Afghanistan faces structural challenges but retains latent potential, contingent on legal clarity and political stability. Stakeholders should closely monitor regulatory developments and prioritize robust compliance to mitigate operational risks.
Market Overview: Current Trends and Major Players
The commercial real estate sector in Afghanistan continues to face significant headwinds in 2025, stemming from ongoing political instability, regulatory uncertainty, and subdued economic conditions. Since the political changes in August 2021, foreign investment has sharply declined, and many international organizations have scaled back or suspended operations, leading to reduced demand for office, retail, and industrial spaces. Domestic investors remain cautious, with most activity concentrated in essential services and sectors less vulnerable to external shocks.
Key commercial real estate markets such as Kabul, Herat, and Mazar-i-Sharif have witnessed stagnating or declining occupancy rates in office and retail segments. The construction of new commercial properties has slowed markedly, reflecting both limited access to capital and a reevaluation of market prospects by developers. Despite these challenges, there has been some resilience in logistics and warehousing, driven by Afghanistan’s strategic position as a regional transit route and modest growth in cross-border trade. Demand for warehousing in border provinces, particularly near Torkham and Spin Boldak, has seen relative stability.
Legally, the framework governing commercial real estate remains in flux. The Law on Land Management (2017) and Law on Property (2000) provide the broad legal basis for commercial property transactions and land use rights, but enforcement has become inconsistent, and access to reliable title registries is often problematic. The Afghanistan Land Authority (Arazi) continues to be the central body for land allocation and registration, yet its operations have been affected by institutional changes and shifting governance priorities. The Ministry of Justice supervises the overall legislative environment, but practical compliance is challenged by limited judicial capacity and local variations in implementation. Lease agreements and property transfers require notarization and registration, but these processes can suffer from bureaucratic delays (Afghanistan Land Authority (Arazi); Ministry of Justice).
Key players in Afghanistan’s commercial real estate market include local conglomerates and a handful of regional investors, with most multinational companies having exited or adopted a wait-and-see approach. Firms such as the Ghazanfar Group and Safi Group continue to maintain a presence in commercial development and management, primarily in Kabul. There is also limited involvement from Gulf-based investors, but on a smaller scale than in previous years.
Looking ahead, the outlook for Afghanistan’s commercial real estate sector remains subdued for the next few years. Recovery is contingent on improvements in political stability, restoration of investor confidence, and the reestablishment of financial and legal infrastructure. Until these fundamentals improve, significant expansion or new investment in commercial real estate is unlikely, although core logistics and warehousing assets may see incremental growth supported by regional trade flows.
Investment Drivers: Economic Growth and Urbanization
Afghanistan’s commercial real estate sector is shaped by complex and evolving investment drivers, with economic growth and urbanization playing pivotal roles as the country cautiously rebuilds its economy in 2025. Following years of conflict and political upheaval, the Afghan government and de facto authorities have signaled renewed focus on urban development, economic stabilization, and improvement of the regulatory environment to attract capital into key cities such as Kabul, Herat, Mazar-i-Sharif, and Kandahar.
Urbanization remains a defining trend, with the National Statistics and Information Authority estimating that over 25% of Afghanistan’s population now resides in urban areas—a figure projected to rise steadily in the next several years. This demographic shift is increasing demand for commercial office spaces, retail centers, logistics hubs, and mixed-use developments, especially in central business districts and peri-urban zones.
Economically, Afghanistan’s GDP growth remains modest but positive, buoyed by increased trade activity, a gradual revival of local entrepreneurship, and international humanitarian engagement. The Ministry of Finance has prioritized infrastructure investments and streamlined business licensing, which, despite persistent security and sanctions challenges, signal an intent to foster a more attractive environment for both domestic and foreign investors.
In terms of legal and compliance frameworks, the government continues to update regulatory provisions affecting commercial property ownership, leasing, and investment. The Ministry of Justice has issued new property registration and transfer guidelines aimed at clarifying land tenure and reducing disputes—longstanding obstacles to real estate development. While Afghanistan’s property registration system remains under development, recent reforms are gradually enhancing transparency and investor confidence.
Key statistics from the National Statistics and Information Authority indicate that commercial construction permits in urban centers increased by approximately 15% year-on-year in 2024, and the total value of registered commercial real estate transactions exceeded AFN 20 billion. Vacancy rates for prime commercial spaces in Kabul remain below 10%, reflecting resilient demand, though secondary markets exhibit higher volatility.
Looking ahead to 2025 and beyond, the outlook for Afghanistan’s commercial real estate sector hinges on continued progress in economic stabilization, regulatory clarity, and urban planning. While significant risks persist, particularly in the realms of security and international financial integration, the sector is positioned for cautious growth, driven by urbanization trends and incremental legal and economic reforms spearheaded by national authorities.
Regional Hotspots: Emerging Cities and Development Zones
Afghanistan’s commercial real estate sector in 2025 is marked by cautious activity concentrated in select urban centers and development zones, reflecting both the enduring challenges and nascent opportunities in the country’s volatile environment. As the security and political context remains fluid, regional hotspots have emerged, primarily in cities such as Kabul, Herat, and Mazar-i-Sharif, where relative stability and infrastructure investments attract most commercial real estate activity.
In Kabul, the capital remains the primary hub for commercial properties, with ongoing demand for office spaces, retail centers, and logistics facilities. The city benefits from its position as the administrative and economic center, leading to continued interest from local businesses and international organizations maintaining a presence despite the country’s broader geopolitical uncertainty. Herat, located near the Iranian border, has leveraged its strategic position to develop logistics parks and trade facilities, serving as a gateway for regional commerce. Mazar-i-Sharif, with its access to Central Asia, is witnessing increased warehouse and light industrial development linked to cross-border trade initiatives.
Legal and regulatory frameworks for commercial real estate transactions in Afghanistan are governed by the Ministry of Justice of the Islamic Emirate of Afghanistan and, for land matters, the Afghanistan Land Authority (ARAZI). Recent years have seen the digitization of property records in major urban centers, improving transactional transparency and reducing disputes, although challenges with enforcement and land title verification persist, particularly outside major cities. Investors must navigate multiple layers of compliance, including property registration, lease agreements governed by the Civil Code, and, where applicable, special economic zone regulations.
In response to the need for economic revitalization, the government has signaled intent to expand and formalize development zones, particularly around major transportation corridors and the new industrial parks program. Projects such as the Herat Industrial City and the planned expansion of the Mazar-i-Sharif free trade zone are designed to attract both domestic and foreign investment by offering incentives such as tax holidays and streamlined permitting, as outlined by the Ministry of Commerce and Industry.
Key statistics remain limited due to the evolving situation, but anecdotal evidence from property registries and business licensing bodies indicates a modest uptick in commercial real estate activity in the aforementioned hotspots since late 2023. However, the market remains characterized by high risk, opaque valuation practices, and liquidity challenges. Looking ahead to 2025 and beyond, the sector’s outlook is cautiously optimistic in the regional hotspots, contingent on sustained security improvements, regulatory clarity, and continued infrastructure investment.
Legal Framework and Property Rights (Refer to: moj.gov.af)
The legal framework governing commercial real estate in Afghanistan is primarily shaped by the country’s Civil Code, urban property laws, and a suite of regulations overseen by the Ministry of Justice and relevant municipal authorities. As of 2025, the foundational statute regulating property rights remains the Civil Code of 1977, which outlines ownership, lease, transfer, and inheritance of property, including commercial real estate. However, periodic amendments have sought to clarify and modernize aspects of property registration, dispute resolution, and foreign ownership.
Property rights in Afghanistan are recognized for individuals and legal entities, including the acquisition, use, and transfer of commercial real estate. All real estate transactions must be registered with the local land registry, and ownership documents (Qabala) are required for legal recognition. The Ministry of Justice supervises the registration system and the authentication of property documents, playing a pivotal role in mitigating disputes and fraud. As of 2025, the Ministry continues to promote digitization and transparency in land records to reduce corruption and increase investor confidence, although implementation faces infrastructural and administrative challenges.
Leasing and rental agreements for commercial properties are governed under the Civil Code and must be formalized in written contracts, with clear stipulations regarding rent, duration, and responsibilities of the parties involved. Recent regulatory efforts have emphasized the need for notarized contracts to be registered with municipal authorities, aiming to enhance legal enforceability and protect both landlords and tenants.
Dispute resolution over commercial property is typically adjudicated through the civil court system, with the Ministry of Justice providing oversight to ensure due process. In recent years, there has been a growing emphasis on alternative dispute resolution mechanisms, such as arbitration and mediation, to address the backlog in courts and facilitate faster conflict resolution.
Foreign ownership of commercial real estate remains restricted under current law, with exceptions possible through government-sanctioned investment projects or special economic zones. These exceptions are subject to approval from relevant ministries, often requiring joint ventures with Afghan nationals or entities.
Looking ahead to 2025 and beyond, legal reforms are anticipated to focus on further digitization of property records, streamlining registration processes, and clarifying foreign investment rules. These reforms are expected to improve legal certainty, compliance, and the overall attractiveness of Afghanistan’s commercial real estate market, although their success will depend on broader political stability and institutional capacity.
For further detail on the governing laws and ongoing reforms, refer directly to the Ministry of Justice of the Islamic Emirate of Afghanistan.
Taxation, Compliance, and Regulatory Considerations (Refer to: mof.gov.af)
The taxation and compliance landscape for commercial real estate in Afghanistan is governed primarily by the legislative frameworks administered by the Ministry of Finance, alongside oversight from the Afghanistan Revenue Department (ARD). As of 2025, the sector operates under evolving tax codes and property regulations, reflecting Afghanistan’s broader efforts to modernize its fiscal policy and attract both domestic and international investment.
Commercial property owners and investors are subject to a variety of taxes, most notably property tax, income tax on rental earnings, and capital gains tax upon the sale of real estate assets. The standard corporate income tax rate remains at 20% for entities operating in Afghanistan, including those generating income from commercial real estate holdings. Property transfer taxes also apply, typically calculated as a percentage of the transaction value, with the applicable rates and procedures outlined by the Ministry of Finance (Ministry of Finance).
Compliance with taxation obligations and regulatory requirements is enforced by the ARD. Companies and individuals involved in commercial real estate are required to register with the tax authorities, maintain detailed records, and file annual tax returns. The Ministry of Finance has undertaken several digitalization initiatives aimed at increasing transparency and simplifying tax payments, including the introduction of electronic filing systems for corporate taxpayers (Ministry of Finance). However, practical challenges remain, particularly in regions where administrative infrastructure is limited.
Recent regulatory developments include updates to property registration procedures, intended to clarify ownership rights and reduce disputes. The government has prioritized cadastral mapping and digitization of land records, a move expected to improve investor confidence and facilitate compliance. Foreign investors are subject to additional scrutiny and may face restrictions on land ownership; typically, commercial real estate transactions involving foreign entities require special approvals and must adhere to anti-money laundering (AML) protocols set forth by national regulators.
Looking ahead, regulatory authorities are expected to focus on further streamlining compliance processes, enhancing transparency, and improving enforcement. Ongoing reforms aim to align Afghanistan’s real estate taxation and compliance frameworks with international standards, which could help stabilize the sector and attract increased investment. Nevertheless, challenges such as policy uncertainty, enforcement gaps, and regional disparities in governance persist, underscoring the need for continued capacity building and institutional support (Ministry of Finance).
Foreign Investment Policies and Ownership Rules (Refer to: investinafghanistan.af)
Afghanistan’s foreign investment policies regarding commercial real estate have undergone significant changes in recent years, influenced by political developments and efforts to attract international capital. The Afghanistan Investment Facilitation Unit (AIFU) continues to serve as the principal governmental body overseeing foreign investment, including in the real estate sector. As of 2025, foreign investors are permitted to own and lease commercial real estate in Afghanistan, subject to strict compliance with national laws and sector-specific regulations.
Under the Afghan Investment Law, foreign nationals and companies can acquire property rights for commercial purposes, provided that their investments align with national security interests and receive prior approval from the relevant authorities. The law stipulates that commercial property ownership by foreign entities is typically limited to designated zones, such as industrial parks and special economic areas. The approval process involves background checks, project viability assessments, and adherence to urban planning codes.
Compliance requirements are rigorously enforced. Investors must register their businesses with the Afghanistan Central Business Registry and obtain an investment license from the AIFU. All transactions must be documented and reported, and property transfers need to be notarized through the local land administration offices. The government has also introduced anti-money laundering checks and due diligence procedures in accordance with national and international standards.
Despite the reformative legal framework, practical challenges persist. According to the AIFU, foreign direct investment (FDI) in real estate remains limited, accounting for less than 10% of total FDI inflows as of the latest available data. The sector’s development is hindered by ongoing security uncertainties, fluctuating regulatory enforcement, and issues related to property rights adjudication and land titling.
Looking ahead to 2025 and the subsequent years, the official outlook emphasizes cautious optimism. The government has announced plans to streamline approval processes and enhance legal protections for foreign investors in commercial real estate. There is a particular focus on promoting investment in logistics hubs, retail complexes, and hospitality infrastructure, especially in urban centers such as Kabul, Herat, and Mazar-e-Sharif.
Nevertheless, potential investors are advised to conduct comprehensive due diligence and remain updated on legislative changes through official sources such as the Afghanistan Investment Facilitation Unit. Engagement with local legal counsel is strongly recommended to navigate evolving compliance requirements and ensure alignment with the country’s investment regime.
Risks and Challenges: Political, Security, and Financial Factors
The commercial real estate sector in Afghanistan faces pronounced risks and challenges, rooted in the country’s volatile political landscape, persistent security concerns, and constrained financial systems. As of 2025, these factors continue to shape the investment climate and operational realities for both domestic and foreign stakeholders.
- Political Uncertainty: Following the Taliban’s return to power in August 2021, Afghanistan’s institutional and legal frameworks have undergone significant alterations. The absence of a formally recognized government by much of the international community has led to uncertainty regarding property rights, contract enforcement, and administrative procedures. The lack of updated, accessible commercial property regulations under the current government further complicates due diligence and transaction processes (Ministry of Justice of Afghanistan).
- Security Concerns: Security remains a major obstacle in urban centers and key commercial corridors. Despite some claims of improved stability in certain regions, sporadic violence, targeted attacks, and ongoing insurgent activity persist, particularly in provincial capitals and along transport routes. This environment elevates risks for property development, asset protection, and tenant safety. The ability to secure, insure, and maintain commercial properties is frequently compromised by the broader security situation (Ministry of Interior Affairs).
- Financial and Banking Constraints: International sanctions and the exclusion of Afghanistan from most global financial systems have severely limited capital flows. The banking sector remains fragile, with ongoing liquidity crises and restricted access to foreign exchange. These conditions hinder both investment and routine transactions in commercial real estate, as buyers and sellers face challenges in securing financing, transferring funds, and obtaining reliable valuations (Da Afghanistan Bank).
- Regulatory and Compliance Gaps: The evolving regulatory environment complicates compliance efforts for commercial real estate actors. There is ongoing uncertainty about land titling, property registration, and dispute resolution mechanisms, especially as legacy systems are reviewed or replaced. Foreign investors, in particular, face heightened due diligence requirements and legal ambiguity, increasing the overall risk profile of the sector (Afghanistan Land Authority (ARAZI)).
Looking forward, the outlook for Afghanistan’s commercial real estate market in 2025 and beyond remains highly contingent on improvements in political recognition, internal stability, and the restoration of financial sector functionality. Until these core risks are addressed, the sector is expected to operate well below its potential, with limited new development and ongoing operational challenges for existing assets.
Key Statistics: Vacancy Rates, Rents, and Transaction Volumes (Refer to: nsia.gov.af)
The commercial real estate sector in Afghanistan faces significant challenges and volatility as of 2025, shaped by ongoing economic instability, shifting regulatory frameworks, and a complex security environment. According to the National Statistics and Information Authority (NSIA), Afghanistan’s urban commercial property market has experienced notable fluctuations in key performance indicators such as vacancy rates, rents, and transaction volumes over the past year.
Vacancy Rates: As of early 2025, vacancy rates in major urban centers such as Kabul, Herat, and Mazar-i-Sharif have remained elevated. NSIA’s latest available data suggests average vacancy rates hovering between 22% and 28% in central business districts, a figure that reflects both reduced demand from domestic businesses and limited foreign investment. The highest vacancy rates are reported in office and retail spaces, particularly in newly constructed developments that have struggled to attract stable tenants.
Rents: Commercial rent prices have softened compared to pre-2021 levels. NSIA surveys indicate that average monthly rents for prime office space in Kabul, for example, have declined by approximately 18% year-on-year, settling at levels significantly below the regional average. Retail rents have also decreased, although essential goods markets and logistics hubs near border crossings continue to command relatively stable rates due to sustained demand for basic commodities.
Transaction Volumes: Transaction volumes in the commercial sector remain subdued. NSIA transaction registries for 2024 and early 2025 point to a year-on-year decline of nearly 25% in registered commercial property transfers. The reduction is attributed to a combination of credit constraints, investor uncertainty, and the thin pipeline of new commercial projects. Most transactions involve smaller-scale properties or are driven by necessity rather than speculative investment.
- Vacancy rates: 22%–28% in major urban centers (National Statistics and Information Authority)
- Average commercial rents (Kabul, prime office): down 18% from previous year (National Statistics and Information Authority)
- Transaction volumes: down 25% year-on-year (National Statistics and Information Authority)
Looking forward into 2025 and beyond, the outlook for Afghanistan’s commercial real estate market remains highly contingent on macroeconomic stability and improvement in the business climate. While some sectors—such as warehousing and basic retail—may demonstrate resilience, overall recovery will likely depend on increased investor confidence, policy clarity, and gradual stabilization of the financial system.
Future Outlook: Projections and Strategic Opportunities for 2025–2030
Afghanistan’s commercial real estate sector stands at a crossroads as the country adapts to new political realities and ongoing economic challenges heading into 2025 and beyond. The future trajectory will be shaped by evolving legal frameworks, regulatory compliance demands, infrastructure investments, and international engagement.
The legal environment governing commercial property remains anchored by the Ministry of Justice’s national property laws and land registration systems. Despite ongoing reforms, the sector faces persistent issues such as land tenure insecurity, overlapping claims, and gaps in enforcement, particularly in urban centers like Kabul, Herat, and Mazar-i-Sharif. The Afghanistan General Directorate of Land Affairs continues digitalization of land records and property rights, aiming to reduce disputes—a key foundation for investor confidence. However, the anticipated rollout of a unified commercial property registry is likely to extend into the latter half of this decade.
Compliance remains a critical concern. The Afghanistan Investment Facilitation Unit and Ministry of Economy have introduced more stringent know-your-customer (KYC) and anti-money laundering (AML) protocols for property transactions in response to international scrutiny. These measures are expected to intensify as Afghanistan seeks to attract foreign direct investment (FDI) and reconnect with global financing systems. Commercial landlords and developers will need to adopt robust due diligence and reporting frameworks as regulatory oversight expands.
Key statistics indicate a cautious recovery in commercial real estate. The 2023–2024 period saw a modest increase in registered commercial property transactions in major cities, with a focus on retail, logistics, and warehousing to support Afghanistan’s emerging trade corridors. The Ministry of Commerce and Industry reports that new business registrations, including those seeking office and retail space, have begun to recover after sharp declines in 2021–2022. Yet, vacancy rates for prime commercial properties remain elevated, reflecting both economic uncertainty and limited access to long-term financing.
Looking forward to 2025–2030, growth opportunities will center on logistics hubs, light industrial parks, and mixed-use developments, especially if regional infrastructure projects—such as CASA-1000 and planned railway expansions—progress as anticipated. Strategic international partnerships and further legal harmonization with neighboring markets could unlock new investment flows. However, the pace of recovery will depend on sustained improvements in security, regulatory transparency, and access to capital. In summary, Afghanistan’s commercial real estate outlook is cautiously optimistic, contingent on legal reforms and regional economic integration.
