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

In January-July the amount of construction works increased in Azerbaijan by 25.7 percent. The construction works in the public sector amounted to 27.4 percent during the year, in the private sector - 72.6 percent.

Of the total construction works, 72.7 percent accounts for the primary construction, reconstruction and expansion, 18 percent - capital repair, 4.7 percent - current repair, 4.6 percent - other construction work

In January-July, 59,200 people were involved in the construction sector of Azerbaijan, nominal wages in the construction sector amounted to 496.7 manat, which is 11.8 percent more than January-July 2009, including wages in state-owned companies amounted to 351.5 manat (with a 4.4 percent reduction during the year), private companies - 642.2 manat (with growth at 27.4 percent).  

Total area of residential buildings put into use in Azerbaijan in January-July made up 821,700 square meters, which is 24.9 percent more than the same period of last year.

2.313 billion manat was invested in the construction of production facilities or 27.5 percent more than the same period of 2009, 2.253 billion manat (1.7 percent less) in the facilities in the service sector.

Total investments in the main capital amounted to 4.567 billion manat, increasing by 11.2 percent during the year. Funds spent on construction works amounted to 3.048 billion manat, or 5.4 percent more than January-July 2009.

Primary housing market

Average price per square meter in July in the primary housing market amounted to 866 manat, which is four manat (0.4 percent) lower than the figure in June per square meter.


Prices in July fell by 1.6percent compared to the second quarter, 3.5 percent compared to early 2010, and 8.6 percent compared to the same period of the last year.

The index of prices dropped by 0.4 percent, and amounted to 333.

In July construction of 441 residential buildings were continued, and number of construction companies remained at the same level - 153.

Least of all transactions on purchase and sale were recorded in Yasamal and Khatai districts. On the number of constructed residential buildings among Baku's districts the Yasamal district ranks the first. Khatai and Nasimi rank the second and third.

Secondary housing market

The dynamics of bargaining declined by 2.5 percent in the Baku secondary real estate market in July, the Property Market Participants public organization.

The share of new buildings in the housing market continues to grow in Baku, and in July this figure was 60.9 percent. There was a relative increase in the share of new buildings in the secondary housing market - at 0.2 percent compared to June.

Despite the 0.2-percent decline in proposals on the market, the average price fell by 0.7 percent. Under the influence of mortgage lending in this segment of the market the liquidity remained stable, but the risk is still high. According to studies, on the secondary market price index declined by 0.7 percent compared to the cost of apartments. Prices index on the secondary market decreased by 1.5 points.

As a result of decrease of proposals by 0.2 percent, the number of apartments proposed to the market was 6,753. Share of Yasamal, Nasimi, Narimanov and Khatai districts in the portfolio of this segment was 80 percent.

In July, price increase was not observed in any districts of Baku, and the most significant decline in prices was observed in Yasamal district of Baku - at 0.7 percent. Average price per square meter of secondary housing was $1,102, and the share of apartments proposed to the market below the average price amounted to 58.6 percent in the total portfolio of the market.

The average figure for an apartment was amounted to 2.54, and the average price of one room was $45,621, the average price for an apartment - $118,740.

Khatai, Yasamal, Binagadi and Narimanov were the most active areas for the activity coefficient, since these districts were the most attractive in terms of the mortgage.

During last month number of three, four and five-room apartments decreased. The most significant decline in proposals was observed in four-room apartments - at 1.3 percent. Proposals on two-room apartments increased by 0.2 percent.


Land market

For the first time in the past two years, an increase was recorded in average prices of one hundred square meters of land in Baku. The average price of one hundred square meters of land in July increased by 0.5 percent - up to $14,136 compared to the June index of $14,062.

The increase in prices was observed in second and third zones of the city. Land prices continue to decline in the first and fourth zones because of the excess of market price above the real price.

The experts of the organization say too high prices for land in the center of the city brought to the decline in demand in the first zone of the city and the lower prices.

Unlike June, in July, in the fourth zone, the reduction of prices gradually began to accept the relative character.

The excess price over the real value did not seriously affect the profitability of land, but  had influence on increasing of the exposure period and reduction of liquidity.

Meanwhile, interest in this type of property is reduced due to the fact that the land still can not be the subject of pledge.

The most significant decline in prices in July was observed in Yasamal district - 0.6 percent. The relative increase in prices occurred in Garadagh district of Baku - 0.9 percent. The most active were Binagadi and Khatai districts on the land market last month. The most passive, as in previous months, was Nasimi district.

The most expensive plot in July was offered to the market in Nasimi district of Baku for $250,000 per one hundred square meters, the cheapest - in the Absheron area for $ 350 per hundred square meters.

In July, about 797.1 acres of land was proposed on the land market in Baku, of which 78 percent were vacant lots, the remainder - non-residential areas and older residential areas.

Building materials

In July, prices for construction materials in Baku declined by 0.48 percent compared to June, the NGO Property Market Participants said. Experts of the organization researched 38 items on 87 varieties of building materials. An increase in prices for eight building materials was observed.

Some 54.02 percent of construction materials was produced at the local market, while 45.98 percent was imported.

In July, compared to the same period of last quarter the difference in prices was -3.5 percent, compared to January +15.9 percent. While compared to the same period of last year 20.2 percent increase in prices was observed.

The monitoring revealed that the proportion of local production of building materials in the total portfolio in this segment of the market exceeded imported goods by 3.45 times compared to the previous month.

Last month an increase was observed in imports of timber from Russia, which is attributable mainly to seasonal conditions in connection with the obstacles of use of the domestic market's materials. Due to the low purchasing capacity passivity was observed in some plants for production of whetstone, which has led decrease in prices. Such changes were not observed at the market of non-mineral building materials.

The following construction materials increased in prices (in percentage):







roofing slate


zinc sheet




Prices reduced for the following construction materials:


- 4,96

iron sheet

- 1,20


- 1,03

foam plastic

- 6,25


- 1,34

glass wool

- 9,52

Commercial facilities

Non-residential facilities market in Baku decreased by 0.2 percent, rent of commercial buildings - by 0.5 percent in July, the public organization "Participants of property market" said.

Number of proposals on the market decreased by 0.2 percent in July.

The average price of a square meter of non-residential facility area decreased and was $2,958 in July. According to the held studies, lower prices compared to the first quarter amounted to 0.9 percent, as compared with July of last year - 1.9 percent.

Prices for non-residential areas in the first, third and fourth zones of the city fell by 0.1, 0.3 and 0.5 percent respectively. Over the past month increase in the average price on the market was observed in the second zone at 0.1 percent.  Increase in the average price on the market was observed in the Garadagh district at 1.5 percent, but the most significant decrease was observed in the Khatai district - at 1 percent.

The share of commercial buildings, proposed on the market below the average price ($2,944 per square meter) amounted to 55.2 percent of the market portfolio.

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