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

In January-September the amount of construction works increased in Azerbaijan by 31.9 percent. The construction works in the public sector amounted to 26.4 percent during the year, in the private sector - 73.6 percent.

Of the total construction works, 26.4 percent accounted for capital repair, 4.5 percent - current repair, 4.4 percent - other construction work

Of the total construction works, 73.6 percent accounted for initial construction, renovation and expansion, 17.3 percent - capital repairs, 4.7 percent - the current repair, 4.4 percent - in other construction work.

First residential market

Average price per square meter in September in the primary housing market decreased by 0.1 percent or one manat to 865 manat, Participants of Property Market public organization said.

The decline in prices was at 0.1 percent in September compared to early third quarter, 3.6 percent - early 2010, 9.6 percent - the same period of 2009 and 27.6 percent - the peak pre-crisis period, or September 2008.

In September, the primary housing market recorded an activity that is typical for the season.

The price index decreased by 0.1 percent and amounted to 332 points in September compared to 333 in August.

On the number of constructed residential buildings among Baku's districts the Yasamal district ranks the first (27.2 percent). Khatai (21 percent) and Nasimi (17.1 percent) rank the second and third.

Three residential buildings (two in Yasamal and one - in Nasimi) were withdrawn from sale in September, due to which the number of buildings offered for sale decreased from 441 to 438. The number of construction companies remained at the same level - 153.

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

Secondary residential market

Prices in the secondary housing market of Baku fell by 0.9 percent in September, Property Market Participants public organization said.

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

Despite the 0.4-percent increase in proposals on the market, the average price fell by 0.6 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 0.6 percent. Price index on the secondary market decreased up to 202,4 points.

As a result of increase in proposals by 0.5 percent, the number of apartments proposed to the market was 6,810 in September. Share of Yasamal, Nasimi, Narimanov and Khatai districts in the portfolio of this segment was 80.1 percent.

In September, no price increase was observed in Baku, and the most significant decline in prices was observed in Narimanov district of Baku - at 0.9 percent. Average price per square meter of secondary housing was $1,093 reducing by $7, and the share of apartments proposed to the market below the average price amounted to 57.4 percent in the total portfolio of the market.

The average figure for an apartment amounted to 2.56, and the average price of one room was $43,196, the average price for an apartment - $115,765.

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 for one hundred square meters of land increased from $14,132 to $14,243 in Azerbaijan in September, Property Market Participants public organization said. 

"The impact on the indices was also slight because the increase was insignificant," a statement said. "The increase in prices was observed mainly in the first and second zones of the city. Land prices dropped in the first and fourth zones," a statement said.

The price for one hundred square meters of land reduced by 0.4 percent and hit $170,232 in the first zone, by 0,5 percent up to $3,522 in the fourth zone. The price was $96,842 increasing by 0.6 percent in the second zone, $18,932 increasing by 0,9 percent in the third zone.

The experts said that too high prices for land in the city center led to lower prices and a decline in demand in the first zone of the city. Lower prices gradually began to have the relative nature in September in the fourth zone as opposed to the previous months.

Although the excess of price above the real value did not seriously affect the profitability of land, the exposure period increased and liquidity reduced. Moreover, the interest in this type of property declined due to the fact that the land still can not be the subject of a pledge.

The most significant decline in prices in September was observed in Binagadi district - by 0.9 percent. The largest price increase occurred in the Khatai district of Baku - by 0,5 percent. The most active districts in the land market were Binagadi and Khatai. The most passive was Nasimi district.

The most expensive land in September was offered to the market in Nasimi district of Baku for $230,000 per hundred square meters, the cheapest - in the Absheron region for $ 350 per hundred square meters. About 792.8 hectares of land was proposed to the land market in Baku in September. The term of land exposition increased up to 262 days.

Building materials

In September, prices for construction materials in Baku decreased by 0.69 percent compared to August, the NGO Property Market Participants said.

According to the report, continuation of construction works in the private sector and within government programs, as well as restoration of infrastructure in the country's regions served to increase activity in the market.

Experts of the organization researched 38 items on 88 varieties of building materials. Some 54.55 percent of goods were produced in the local market, and 45.45 percent were imported.

In September construction materials rose in price by four percent compared to early third quarter, compared to January - by 20.5 percent. Eighteen percent increase in prices was observed compared to the same period of last year.

"Although volume of timber imported from Russia rose in prices in September and exceeded demand, there was a shortage of imported dict. In addition, shortage of metal products was observed. Entrepreneurs account it for the fact that Russian and Ukrainian manufacturers interested in exporting their products to Europe" the report says.

The following construction materials fell in prices (in percentage) in September:





Crushed stone


Iron pipes (seamless)


Prices reduced for the following construction materials:



iron sheet








Glass wool


Commercial facilities

The prices in non-residential facilities market in Baku increased by 1.5 percent, rent of commercial buildings decreased by 0.2 percent in September, Participants of Real Estate Market public organization reported.

Number of proposals on the market increased by 2.2 percent in September.

The average price of a square meter of non-residential facility area increased from 2,938 to $2,973.

According to the held studies, prices increased by 0.8 percent compared to the first quarter, and 0.6 percent as compared with September of last year.

Prices for non-residential areas in the first and fourth zones of the city fell by 0.9, 0.6 respectively and amounted to $4,881 and $795, but in the second zone, 0.5 percent growth was recorded, amounting to $3,475.   

Increase in the average price on the market was observed in the Garadagh district at 2.2, but the most significant decrease was observed in the Surakhani district - at 1.1 percent.

The share of commercial buildings, proposed on the market below the average price ($2,973 per square meter) amounted to 51.7 percent of the market portfolio.

Despite the increase 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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