Review of construction sector in Azerbaijan (January 2015)

A number of amendments were approved in the Azerbaijani construction sector in January 2015.
The rules of making information, as well as the state register of buildings were approved upon the decision No 4 of the Azerbaijani Cabinet of Ministers dated January 12.

The rules were approved in connection with the Town Planning and Building Code of Azerbaijan which has already entered into force. The rules regulate the filling and maintaining a register, as well as the work of a single information system for urban planning and construction.

The registry will consist of the information about the facilities which are under construction, operating and demolished facilities. There will be also the information about the planned buildings to ensure the territorial stability.

A list of documents was approved for registration of rights to the real estate constructed or acquired before the law "On the real estate register" entered into force. The documents were approved upon President Aliyev's decree. A list of documents is the basis for including in the real estate register. The documents must confirm that the real estate is not located on the corresponding trunk lines, under high-voltage power lines, in the zone of water and transport infrastructure facilities, as well as in the areas designated for developing the oil and gas fields.

President Aliyev also approved the list of documents required to prove the ownership rights to real estate acquired or constructed before the law "On state registration of real estate" entered into force.

The list includes some documents. These are the documents about the land plot registry by the executive committees of the Soviet bodies, the land registration of the technical inventory bureau of local Soviet executive committees, a document on the rights to the property, issued by the city and district councils of the Soviet executive committees, decrees of the rural deputy board, a document confirming the payment of property (apartment or private house) upon a decree of the district councils, the notarized document confirming the division of property between husband and wife and the court's decision.

This list also includes the documents issued by city and district deputies concerning the land ownership, their permanent or temporary use, issued from January 24, 1992 until December 19, 1995, the district and city councils' decrees to grant the land plots from November 9, 1991 until December 19, 1995 and technical certificates issued by the technical inventory bodies for private houses till January 1, 2001.

The registration of illegally built houses intensifies the housing market.

According to the Azerbaijani State Statistics Committee, the construction work increased by 25.66 percent and hit 443.2 million AZN in Azerbaijan in January 2015.

Some 63.5 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 14.9 percent - overhaul, 7.2 percent - current repair and 14.4 percent - other construction work.

Around 161,200 square meters of housing were commissioned in Azerbaijan in January compared to 156,500 square meters in October. Around 1.806 million square meters of housing have been commissioned since early 2014, which is 3.6 percent less than in the same period of 2013.

According to MBA Group consulting company, the activity on the real estate market of Azerbaijan has declined for the last three or four months. The property prices in the residential sector of Baku in 2015 can drop by 10 percent.

If we compare the commercial real estate sector with the residential sector, the rise in prices in the residential sector was slightly above 16 percent in 2014.

But the commercial facilities rose in price by about 10 percent. In January 2015, the prices in the residential sector reduced by 0.3 percent. The prices on commercial facilities remained at a stable level.

The volume of construction work is expected to be reduced in the residential sector of Azerbaijan in 2015. This is connected with the fall in oil prices on the world markets. The unstable situation in Russia due to the Western sanctions caused a decrease in the volume of investments on the housing market in Azerbaijan.

Taking into account this situation, the small construction companies and private investors can leave the real estate market this year. This will not occur in the first half of this year. Perhaps, the construction volume can be reduced by the end of the year. However, the financially stable companies will continue building.

Construction material market

The companies engaged in building material production in Azerbaijan, produced goods worth 30.3 million AZN in January 2015 or 54.8 percent more than in the same period of 2014, according to the Azerbaijani State Statistics Committee's report.

During this period, Azerbaijan produced 192,800 metric tons of cement (a 18.8-percent increase versus the same period of 2014) and 16,800 metric tons of gypsum plaster (a 9.9-percent growth), the report said.

Azerbaijan also produced 100,600 metric tons of ready-mixed concrete (a 78.3 percent growth), 17,900 metric tons of asphalt (a 61.5 percent growth), 1,700 cubic meters of precast concrete building structures (a 67.3 percent decrease), 957 metric tons of processed marble, travertine, alabaster and items made of them (a 4.2-fold growth).