New buildings grow together with prices

Since 2000 Azerbaijan has been continuing to live "construction boom". The increase of the construction works in Azerbaijan has resulted to that the construction sector became the second after the oil sector. According to the information provided by the Consulting Company MBA, more than 200 construction companies operate in Azerbaijan which continue to actively erect new high buildings. Today more than 800 buildings are under construction in Baku. Thus, the population has concentrated preference to the newly constructed buildings.

Source: State Statistics Committee

The trust of buyers on new buildings is caused by that quality of their construction has improved. The large construction companies pass audit on reception of the certificate of quality. Also Public Service on Consumer Market Control at the Ministry of Economic Development of Azerbaijan started monitoring of the market of the construction materials used at construction of high-storey buildings. Monitoring is carried out both amongst the goods of local manufacture and imported building materials. The Public Service demands participants of the market of building materials not only to observe the quality, but also provide guarantees on expensive building materials.

Due to great demand, the prices for high-rise buildings continue to grow, it is possible to tell, not annually, but daily. At present, averagely the price of sale of square meter of the area in the new buildings in Baku has practically surpassed a rod in $1,100. As compared to May 2007, in May 2008 the rates of increase of the prices for the real estate in Baku have even become more intensive character. Over the past five months of this year, the price index reflecting dynamics of the prices, has raised up to 334.5 points. In a percentage equivalent, the increase of the real estate prices over the past five months, it has made 20.1%, and as compared to May 2008 - 33.4 %. In May increase made up 2.9 %.

Average price for sq.m, USD
Комнаты May Increase, %
One-room 1,899 0,1
Two-room 1,844 0,2
Three-room 1,824 0,2
Four-room 1,785 - 0,2
Five-room 1,612 - 0,1

Source: MBA Consulting Company

The price increase in the first market is connected with the rise in the prices for elite houses. As before, most of new buildings are constructed in the districts of Yasamal, Nizami and Khatai. Over the last months, nearly 5,000 apartments were presented to sale. Basically consumers buy apartments in Nasimi (20 % of market sale), Narimanov (18.8 %) and Yasamal (20 %) areas of capital.

Average price for sq.m, USD
Комнаты May Increase, %
One-room 1,899 0,1
Two-room 1,844 0,2
Three-room 1,824 0,2
Four-room 1,785 - 0,2
Five-room 1,612 - 0,1
Districts May %
Azizbeyov 1,112 0,2
Binagadi 1,630 - 1,0
Garadagh 1,449 0,3
Yasamal 1,762 0,3
Nizami 1,508 0,5
Narimanov 1,831 - 0,1
Nasimi 1,935 - 0,1
Sabunchu 1,462 - 0,5
Surakhani 1,137 -0,3
Sabail 2,447 5,7
Khatai 1,391 - 0,7
Absheron 1,082 4,0

Source: MBA Consulting Company

Price changes in the market of the real estate are closely connected with the tendencies in the world and inside the country. The prompt rise in housing price is connected firstly with improvement of well-being of the capital population. Despite the fact that the price of sq.m rose averagely by almost $100 per month, activity of buyers and solvent demand only increased. Today in Baku it is possible to sell almost all constructed houses and purchasing capacity of people does not weaken. The agiotage amplified also from the process, peculiar to our mentality, speculative operations. Practically all new souses are redeemed by intermediaries at the stage of its construction for the purpose of the subsequent resale and reception of significant dividends, and thus, provoking splash in demand for housing. It is shown that many representatives of regional elite wish to buy to apartments in capital, and it considerably strengthen pressure upon the real estate market.

Also, the number of citizens of other states getting property increases in Azerbaijan from year to year. Up to now, more than 500 foreigners have got real estate in Azerbaijan. Basically, they are citizens of the CIS, the USA, Great Britain, France, Israel, Bulgaria, Iran, etc. Purchase of property by them is connected with their business activities here. Thus, intensity of purchasing apartments was shown by citizens of Iran who were afraid of the beginning of war between Iran and the USA and beforehand bought apartments in Baku.

The intensive rise in prices was accompanied by growth of the prime cost of constructions which made up 12.1 %. The process was caused by increase of expenses for building materials which rose by 8.4%, other expenses - 3.7 %. The ratio of the prime cost to the market price of the real estate makes 1/2. For last year, expenses of the construction companies on building each square meter of housing area have increased in 2 times. So, one year ago, practically $226 was required for construction one sq.m. Now expenses have increased by 2 times. Despite reduction in profitableness of constructions because of growth of costs, the majority of the construction companies compensated profitableness due to increase of cost of apartments. On this background, for a year, the market cost of the real estate increased approximately by 35%.

In addition, the price increase strengthens insufficient internal production of building materials. According to public organization Participants of Real Estate Market, only 40% of the construction materials sold in the market is the Azerbaijan manufacture. Accordingly, a principal cause of rise in prices for building materials is the price increase for building materials in the world market and increase in expenses for transport and import.

Since the beginning of year of the price for building materials have grown by 20%. According to researches of public organization Participants of Real Estate Market, cost of wood increased by 22.1%, armatures - 13.2 %, slate - 15 %, a channel - 24.6 %, metal pipes - 12.2 %, glasses - 16.8 %.

The price rise for the real estate is also supported by presence of mortgage crediting. After a mortgage agiotage which has entailed deficit in credits, Azerbaijan Mortgage Fund of the National Bank was compelled to suspend its activity. Today many Azerbaijan commercial banks provide mortgage credits within own programs. Credits are provided approximately under the annual rate of 10 %. However average term of crediting makes nearly 3 years, and advance payment makes up 25 % of cost of apartment. Local banks are not capable to allocate long-term credits and the Government of Azerbaijan will take all necessary measures for encouragement of activity of commercial banks in this direction. Now for development and renewal of activity of the Mortgage Fund, the National Bank negotiates on attraction of finance from the International Finance Corporation, German KfW and other large commercial banks.

After re-establishing activity of the Azerbaijan Mortgage Fund, the price for the real estate can jump up even more. Availability of the mortgage begins to support solvent demand in the market.

Taking into consideration the situation as a whole, according to the forecasts of the Head of State Service for Register of Real Estate, Arif Garashov, the price in the real estate market of Azerbaijan will rise by 22% by the end of year.

Azerbaijan’s AzerGold CJSC announces tender
Azerbaijan’s AzerGold CJSC announces tender
Azerbaijan to open tourism bureau in Israel
Azerbaijan to open tourism bureau in Israel
Economy Ministry shares data on revenues from Azerbaijan's non-oil and gas sector
Economy Ministry shares data on revenues from Azerbaijan's non-oil and gas sector
Loading Bars
Latest
Building of Azerbaijan’s Mud Volcanoes Tourism Complex to look like crater from above
Strengthening confidence-building measures in Azerbaijan-Armenia relations most important - Russian MFA
Georgia publishes budget performance report of 1Q2021
French lawyers arrive in Azerbaijan’s Ganja city, shelled by Armenia during war (PHOTO)
EIB financing helped to launch 60 satellites into space in 2020
EIB likely to support dev’t of renewable energy sphere in Azerbaijan
Azerbaijan shares data on number of vaccinated citizens for Apr. 22
Azerbaijan confirms 2,047 more COVID-19 cases, 2,610 recoveries
Baku entitled to demand compensation from Armenia – Russian political analyst
IATA revises 2021 forecasts of world airlines losses
Azerbaijan to open tourism bureau in Israel
Belarus to supply components for Azerbaijan to assemble tractors in 2021
Several more Russian airlines allowed to operate flights to Baku
EIB exploring new project ideas to support digitalization across Eastern Partnership
SOCAR won't participate in sales of Antipinski Refinery’s property
NCOC talks Marine Access Channels Project plans at Kazakh Kashagan field
Azerbaijan's Aghdam in complete ruins - French lawyer
Uzbekistan’s Central Bank notes decrease of inflation rate
EAG working on assessing Turkmenistan's compliance with FATF recommendations
Uzbekistan GTL to buy pipes via tender
Kazakhstan’s KazTransOil to pay out dividends for 2020
Economy Ministry shares data on revenues from Azerbaijan's non-oil and gas sector
Turkmenistan elected member of Executive Board of UN Entity for Gender Equality, Empowerment of Women
Historical monuments in Azerbaijan's Aghdam vandalized - French criminal justice attorney
Kazakhstan’s KazTransOil decreases oil transshipment volumes in 1Q2021
Turkmenistan increases processing of agricultural products
Turkmen company exports tomatoes to Austria
Autoclave gas blocks plant construction launched in Kazakhstan's Turkestan
Azerbaijan's Nakhchivan launches new communication facilities in 1Q2021
Azerbaijan's Nakhchivan sees decrease in insurance portfolio for 1Q2021
Iran’s Bahar Azadi gold coin price again falling
Azerbaijan's Nakhchivan State Statistical Committee shares data on reconstruction of roads
Equinor to electrify over 35% of its total oil & gas output base by 2025
Russia leads among countries exporting goods to Azerbaijan
Iran’s CBI allocates funds for import of essential products
Output from Georgian Enguri HPP to increase after reconstruction - Director of Enguri HPP
Azerbaijan shares footage from Jabrayil's Shahverdili village (VIDEO)
Tesla opens Tel Aviv pop-up store
Russian airline receives permission to operate flights to Uzbekistan
Uzbekistan’s 3M2021 retail trade turnover of small business decreases
Number of bank accounts increases in Azerbaijan’s Nakhchivan
American Airlines loss narrows as travel demand picks up
Azerbaijan jointly with Russia sets up car manufacturing enterprise
Number of innovative companies worldwide grows
Kazakhstan boosts production of coal, some petroleum products
Swiss president heads for damage-control EU summit
Etihad Airways to stop operating Boeing 777-300ER jets this year
Installation of info boards on roads leading to Azerbaijan's liberated lands continues (VIDEO)
French human rights activists visiting Azerbaijan's Aghdam (PHOTO)
Georgia increases imports of tomatoes from Azerbaijan
Israeli airline to organize charter flights to Uzbekistan’s Tashkent
Kazakh president points out need to timely oversee major oil projects
US must choose between real ally Ankara and fictional history - Turkish presidential administration
Kazakhstan's trade with Italy down
Uzbekistan boosts import of electric cars
Azerbaijan names winner of auction for right to develop clay field in Goygol
Azerbaijan implementing "Smart Grid" concept in Sugovushan settlement (VIDEO)
Кazakh Electricity Grid Operating Company to buy spares via tender
Uzbekistan exports dried fruits to Malaysia through Turkey
Area of agricultural land in Iran equipped with modern irrigation systems growing
ADB introducing blockchain-based food tracking project in Azerbaijan
Iran reveals COVID-19 data for April 22
Azerbaijan publishes 1Q2021 data on lending to economy
Azerbaijan clears Sugovushan, Talyshkend from mines for construction of power transmission lines (PHOTO)
Several facilities put into operation in Iran's agricultural sector
Azerbaijani president, first lady attend ceremony of laying foundation of Mud Volcanoes Tourism Complex (PHOTO)
Georgia exports ignificant number of tractors, trucks to Azerbaijan
International revenue of Halliburton up amid increased software sales
Iran launches implementation of project on Cheshmeh Khosh oil field
Halliburton sees decrease in operating income
Azerbaijani banks' demand for foreign currency exponentially up
Turkmenistan increases production of vegetables, berries
Uzbek-Korean JV announces tender for consumables
Earth Day 2021: An unprecedented opportunity to restore our Earth
Azerbaijan's Nakhchivan launches work on industrial projects in 1Q2021
Georgia reports 1,226 new cases of coronavirus for April 22
Turkey says France boosts import of domestic cars
Armenia commits provocations on state border with Azerbaijan
UAE's Universal Tubes and India's Tata in world's first blockchain-led trade finance for steel
Cargo transportation at Turkey's Adana airport reduces
Georgian wine exports to Azerbaijan see growth
Uzbekistan’s passenger cars production down in 1Q2021
Value of Turkey's grains, legumes export to Uzbekistan spikes in Mar.2021
Armenia planted plastic mines in liberated Sugovushan village - Azerbaijan's Mine Action Agency (VIDEO)
Russian GDP growth outlook downgraded to 2.9% for 2021
Inflation rate in Iran increases
Renault revenue falls for fifth quarter in a row
Turkey's 1Q2021 chemicals exports to Russia increase
Azerbaijani ministry appoints acting general director of Aztelekom LLC
Karabakh agreement - very important step in protection of human rights - German MFA
Georgian beer exports to Azerbaijan up
Turkmen carpet-making enterprise publishes production data for 1Q2021
ADB initiating program to support SMEs in Uzbekistan
Iran supplies agricultural machinery to farmers
Interconnections to increase Bulgaria’s gas market capacity by 10 bcm
Volume of loaded, unloaded cargo in Iranian ports decreases
Azerbaijan's Nakhchivan raises agricultural production y-o-y
Spanish CAF eyes establishing co-op with Uzbekistan in railway transport
UAE working on increasing export of fresh agricultural products from Uzbekistan
Construction of int'l airport in Azerbaijan's Fuzuli accelerating (VIDEO)
All news