Review of construction sector in azerbaijan (January-August 2010)

In January-August the amount of construction works increased in Azerbaijan by 29.4 percent. The construction works in the public sector amounted to 26.9 percent during the year, in the private sector - 73.1 percent.

Of the total construction works, 18 percent accounted for capital repair, 4.5 percent - current repair, 4.4 percent - other construction work

First residential market

Average price per square meter in August in the primary housing market remained at the July level - 866 manat.

Source: Participants of Real Estate Market public organization


Prices in August fell by 0.5 percent compared to the second quarter, 3.5 percent compared to early 2010, and 9.4 percent compared to the same period of the last year.

Although the foundation of a number of state projects was laid in August, no residential building was in this list. However, one could observe an activity and memorable animation in the primary housing market, which is typical for the season. Activity was observed mainly in the Yasamal, Khatai and Narimanov districts.

"80 percent of apartments are re-offered to the primary housing market, so there is no reduction in the list of new buildings," the organization reported.

According to studies, now the main need is observed on the cost flats, that is apartments in Yasamal (Metbuat Prospect), where the cost per square meter is  700-800 manat,  Khatai (near the Khatai metro station ), where a square meter is 600 - 700 manat and Narimanov - 900-1,000 manat.

On the number of constructed residential buildings among Baku's districts the Yasamal district ranks the first (27.4 percent). Khatai (20.9 percent) and Nasimi (17.2 percent) rank the second and third.

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


Number of buildings























Customers gave priority to two-room apartments in new buildings in August. Five-room apartments have an advantage in the first zone of the city, and the one-room- mostly in the third zone.

"Typically, a demand mostly observed for apartments on the 5-12 floors in new buildings, which prevents the full sale of the building and its exit from the list of the sold buildings," the organization reported.

A summary table provides data for sale of primary residence in Baku:


Number of rooms in July

Number of rooms in August

Share in total construction

Average index in July  (sq. m.)































Secondary residential market

The dynamics of bargaining declined by 0.6 percent on the Baku secondary real estate market in August.

Source: Participants of Real Estate Market public organization


The number of new buildings on the housing market continues to grow in Baku, and in August this figure was 60.4 percent.

Despite the 0.5-percent decline in proposals on the market, the average price fell by 0.2 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 0.2 percent compared to the cost of apartments. Prices index on the secondary market decreased by 1.5 points.

As a result of increase in proposals by 0.5 percent, the number of apartments proposed to the market was 6,785. Share of Yasamal, Nasimi, Narimanov and Khatai districts in the portfolio of this segment was 80.3 percent.

Source: Participants of Real Estate Market public organization

In August, price increase was observed in Binagadi district of Baku, and the most significant decline in prices was observed in Nasimi district of Baku - at 0.8 percent. Average price per square meter of secondary housing was $1,100, and the share of apartments proposed to the market below the average price amounted to 56.8 percent in the total portfolio of the market.

The average figure for an apartment amounted to 2.57, and the average price of one room was $44,656, the average price for an apartment - $113,251.

Source: Participants of Real Estate Market public organization


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

The average price of one hundred square meters of land in August fell from $14,136 to $14,132 compared to July.

The price decrease has not affected the indexes due to the fact that the reduction was of minor nature.

Source: Participants of Real Estate Market public organization

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

The price of one hundred square meters of land fell by 0.2 percent to $171,000 in the first zone,  by 0.2 percent to $18,756 - in the third and by 0.1 percent to $3,540 -in the fourth. The price increased by 0.3 percent up to $96,259 in the second zone.

Based on the experts' estimates, too high prices for land in the city center led to a decline in demand in the first zone of and lower prices.

Unlike the previous months, in August, 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 August was observed in Yasamal district - 0.7 percent. The relative increase in prices occurred in Garadagh district of Baku - 0.5 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 August 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.

During the report period, about 797.4 acres of land was proposed on the land market in Baku, of which 77.8 percent were vacant lots, the remainder - non-residential areas and older residential areas.

The term of land exposure on the market remained at the July index.

Building materials

In August, prices for construction materials in Baku increased by 4.7 percent compared to July.

Experts of the organization researched 38 items on 88 varieties of building materials. An increase in prices was observed on 35 building materials and decrease- only on one.

Source: Participants of Real Estate Market public organization

The price for plastic pipes fell by 0.32 percent. Prices for other types of construction materials remained stable. Some 54.55 percent of materials were produced in the local market and 45.45 percent - imported.

In August, the price difference amounted to 1.7 percent compared to the previous quarter, 21.4 percent compared to January and 16.9 percent increase in prices compared to the same period of 2009.

Purchase passivity observed in the market in recent months has been replaced by increased activity in the sale of certain construction materials.

"The decline in imports of timber materials from due to the forest fires, as well as repair and construction work ongoing in the Sabirabad and other regions affected by fires, caused shortages of these types of materials, which led to sharp price increases for these products.

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





















Roofing slate


Zinc sheet






Laminate flooring


Commercial facilities

Non-residential facilities market in Baku decreased by 0.2 percent, rent of commercial buildings - by 0.1 percent in August.

Number of proposals on the market decreased by 1.2 percent in August.

The average price of a square meter of non-residential facility area decreased from 2,944 to $2,938.

Source: Participants of Real Estate Market public organization


According to the held studies, lower prices compared to the first quarter amounted to 0.7 percent, as compared with August 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 0.2 percent respectively and amounted to $4,897, $2,130 and $800.

Over the past month increase in the average price on the market was observed in the second zone at 0.1 percent up to $3,479.  Increase in the average price on the market was observed in the Garadagh and Binagadi districts at 0.3 and 0.4 percent, respectively, but the most significant decrease was observed in the Nasimi district - at 0.3 percent.

The share of commercial buildings, proposed on the market below the average price ($2,938 per square meter) amounted to 53.9 percent of the market portfolio.

Despite the stabilization of market prices, low demand affected the increase in exposure time, which increases the level of risk for this type of property.

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