Review of construction sector in Azerbaijan (January-May 2010)

In January-May the amount of construction works increased in Azerbaijan by 22 percent. The construction works in the public sector amounted to 29 percent during the year, in the private sector - 71 percent.

Of the total construction works, 68 percent accounts for the primary construction, reconstruction and expansion, 20 percent - capital repair, 5.8 percent - current repair, 4.4 percent - other construction work.

Total area of residential buildings put into use in Azerbaijan in January-May made up 622,800 square meters, which is 47.8 percent more than the same period of last year.

1.538 billion manat was invested in the construction of production facilities or 29.2 percent more than the same period of 2009, 1.182 billion manat (2.7 percent less) in the facilities in the service sector.

Total investments in the main capital amounted to 3.021 billion manat, increasing by 11.3 percent during the year. Funds spent on construction works amounted to 1.977 billion manat, or 5.1 percent more than in January-May 2009.

First housing market

Primary housing of Baku dropped in price by 1.1 percent to $870 per square meter in May compared to $880 in April, Participants of Property Market public organization said.

Prices in May fell by 1.5 percent compared to the previous month, 8.1 percent compared to the same period of 2009, 3 percent compared to the beginning of this year. Price compared to pre-crisis peak point (September 2008) fell by 27.1 percent, the report says.

The greatest demand on the primary housing market was observed on the three-room apartments. As in the previous months, five-room apartments, mostly offered in the first central zone of the city - in the third zone of the city.

Last month construction of 439 residential buildings were continued, the number of apartments was 67,049, units - 1084, floors - 6739. Residential area of all these buildings was 7,848,761 square meters, total construction area of buildings - 624,716 million square meters.

As in previous months, most of the new buildings were built in Yasamal and Khatai districts of Baku, which amounted to 65.3 percent of the total portfolio of the primary housing market.

Mortgage lending, which in previous months, contributed to the recovery of the primary housing market, in May exhaustion of funds led to stagnation in the primary market, the report says.

The summary table indicates change of proposals in first housing market in Baku:

Second housing market

In May, the secondary housing market of Baku had decrease in the dynamics of bargaining at 0.6 percent, Property Market Participants public organization said.

The share of new buildings on the secondary housing market of Baku in May was 61.2 percent, or 0.4 percent less than in April.

Despite the decrease by 0,7 percent of the proposals on the market, prices reduced by 1.2 percent, resulting in a higher risk in this market segment.

During the month, price growth was not observed in any of the districts of Baku. A significant decline in prices occurred in Nizami district of the capital by 1,3 percent. Average price per square meter was $1,132, the percentage of apartments offered on the market below the average price was 59.3 percent of the market portfolio.

The average index of rooms in May on the secondary market amounted to 2.53, the average price of the room - $45,437, the average price of an apartment - $117,449.

About 6,558 apartments were proposed on the market in May. The most attractive areas of Baku on the coefficient of activity were Khatai, Yasamal, Binagadi and Narimanov districts.

Share of Yasamal, Nizami, Narimanov and Khatai districts in the portfolio of this segment of the market amounted to 80,3 percent.

Land market

Average price for land in Baku reduced by 1.1 percent up $14,108 in May compared to $14,256 in April, "Participants of property market" public organization said.

"The price decline was observed in almost all districts of the city, which is mainly linked with the excess of the offered prices over the real price," the organization said.

Based on the organization's data, the highest prices for land in the central part of the city led to a decline in demand in the first and second zones of the city, as well as parallel to lower prices.

The most significant price-cutting by 1.4 percent was in the Sabail district of Baku. The land prices in the Khazar (former Azizbayov) district of Baku increased by 0.2 percent in connection with the summer season. The most active districts in May were Bingadi and Nizami.

The most expensive land in May was proposed in Nasimi district of Baku at $250,000 per one hundred square meters, the cheapest - in the Absheron area costs $350 per hundred square meters.

About 800.1 acres of land was proposed to the land market of Baku in May, of which 77.6 percent were vacant lots, the organization said.

Building materials

Season passivity and lack of buyers was observed in May on the building materials market in Baku, 'Property market participants' public organization said.

"In May, some businessmen quit leased objects on one of the major markets of building materials Dernegul," a statement said.

One of the reasons is reduction of prices for construction materials.

During May, the subject of research were 38 items and 89 varieties of building materials. The monitoring revealed that the proportion of local production of building materials was 53.9 percent of the total portfolio in this segment of the market.

Prices for construction materials in Baku to April reduced by 0.9 percent, the report said.

Prices for 11 types of building materials have risen, for 11 items - have reduced, on other types of building materials prices have remained stable.

Sand, gravel and other materials rise in price among construction materials.

The following construction materials rise in price:

Lower prices were observed for the following construction materials

Commercial facilities

Prices reduced by 0.4 percent in May on the market of commercial buildings in Baku, Participants of property market public organization said.

The average price of non-residential facility in Baku in May totaled $2,958 compared to $ 2,970 per square meter in April. The prices of the previous quarter decreased by 0.4 percent, the same period last year - by 3,1 percent.

Proposals on the market of commercial buildings dropped by three percent. The share of commercial buildings, proposed on the market below the average price amounted to 54.2 percent of the market portfolio.

The rise in prices in May were not observed in any of the districts of Baku, a significant decrease occurred in the Sabunchi district - at 0.9 percent.

Summary table indicates a change in prices: