Problems in real estate registration will be removed in Azerbaijan in 2011

2010 was a year of stabilization for the real estate market of Azerbaijan after two year crisis. Experts predict that the period of stabilization of the Azerbaijani real estate market will be completed in the first half of 2011, and the expected resumption of market activity is expected from the second half of the year. This will primarily be facilitated by the resumption of investments in the market, which today are at a very low level, and the simplification of mortgage lending to the population.

According to State Statistics Committee of Azerbaijan, in 2010 the volume of construction work in Azerbaijan increased by 22.7 percent compared to 2009.

According to the Real Estate Market Participants NGO, in 2010 the foundation of 26 buildings started to be laid in Baku. Five new construction companies entered the market, thus increasing their number to 155, which is 19 companies or 36.8 percent more than in 2009. Increasing the number of construction companies shows renewed interest in the real estate market both by private entrepreneurs and foreign investors.

The growing activity in the real estate market in Azerbaijan requires certain actions to improve the construction sector and the mandatory adoption of the country's building code. Even the International Finance Corporation (IFC) said that the situation with giving permits to the construction activities across the region is difficult, because the system left after the Soviet collapse is confusing. The problem is exacerbated by the fact that there is no single building code in Azerbaijan.

The consequence of these drawbacks is that in the WB and IFC Doing Business report, Azerbaijan occupies the lowest position in the index of Dealing with Construction Permits.

Rating of easiness of business in Azerbaijan as a result of year

In Azerbaijan, the complete package of permits for construction activities (from design to public acceptance of the object) requires 31 procedures, 207 days and the amount equal to 388.9 percent of per capita income for the year.

To enhance the country's rating on this index and develop the sector, IFC recommends to create a "single window" for issuing building permits, accepting differentiated standards based on risk management in construction, providing access to laws, rules and application forms on-line and creating institution of private inspectors.

The introduction of the single-window principle in the Azerbaijani construction sector will be taken into account while adopting construction and city-building codes, Parliamentary Economic Policy Commission Chairman Ziyad Samadzade said last month. "Using this principle promotes improving service quality," Samadzade said. He added that, at present, both codes have been included in the working plan of the parliament. The possibility of uniting them is currently being considered. "The city-building problem is a priority issue. The legislative base must be improved," he said. Presumably, the code will be presented for the first reading in the mid of the spring session of Parliament.

Azerbaijan will simplify procedures associated with the construction of private houses, Parliamentary Apparatus Administrative and Military Legislation Department Head Sayyad Karimov said at the beginning of the year. "Simplifying the procedures for the construction of residential houses is provided in the draft Code "On City Building," Karimov said.

Given the importance of a quick registration and commissioning of private homes, the country will improve the process of registration and determine the regulatory rules, taking into account the views of the people, he added. Today, Karimov said, the Parliament discusses the issue of improving procedures related to construction, as well as the introduction of "single window" in the registration process. The decision to implement a "single window" in the process of registration of immovable property will be made after receiving feedback from the relevant structures, Karimov said.

At the same time among the nine figures, according to which the authors of Doing Business evaluate the business climate in the countries of world, the most advanced in Azerbaijan is considered the registering property. The main role in this regard was played by the innovations in the Azerbaijani legislation, according to which new tariffs were introduced to accelerate the review and issuance of documents certifying the right to property. Azerbaijan has established a new single registry recording real estate transactions, which reduced the number of procedures to register property from seven to four. In addition, the State Registry Service began to provide an opportunity to accelerate two of these four procedures that can arrange registration of property within 11 days.

Thus, to get property rights in Azerbaijan, a company should pass four procedures for 11 days and cost is cheaper than in comparable countries.

In January-November 2010 Azerbaijan registered 86,201 real estate objects, which is 6,050 objects or 7.5 percent more than the figure of 11 months of 2009, the Azerbaijani State Real Estate Register Service under the State Property Committee said.

During 11 months of 2010, 26,365 objects (408 objects or 1.5 percent less than 11 months of the previous year) passed the initial registration, 59,836 objects (6,548 objects or 12.1 percent more than the pervious year) passed the secondary registration. The State registration in mortgage lending registration were passed by 18,699 real estate facilities, which is 5,821 objects or 45.2 percent more than the figure of January-November 2009.

Some 35,447 objects of the total number of registered real estate objects were flat (privatization), 17,480 - private houses and villas, 27,976 - land plots, 2,425 - non-residential buildings, 1,684 - non-residential area, property complexes - 501, multi-storey residential buildings - 13.

Some 36,679 registered objects, or 42.6 percent fell on the capital. Some 947 objects fell on Sabirabad Territorial Department of the State Real Estate Register Service.

Most of the operations on the real estate registration fell on the Absheron region (6,320 operations), Sumgait (6,020 operations), Ganja (3,208 operations) and the Lankaran city (3,098 operations). Some 44 operations on state registration of real estate were carried out in the Yardimli region of Azerbaijan.

Currently, the process is underway to create a single system of real estate cadastre in Azerbaijan, which will cover all real estate facilities in the country. The cadastre will provide confirmation of legal rights to property, as well as to consolidate these rights of citizens to private property. The single cadastre system will also be used by relevant executive authorities, municipalities, as well as legal and physical entities.

At present the property management system is also in the process of automation in Azerbaijan. Complete automated real estate control system in Azerbaijan will be implemented within 2-2.5 years as part of the Registration of real estate project jointly implemented with the World Bank.

Meanwhile, in Azerbaijan, the problem of the existence of unregistered real estate is a problem not only for the capital city Baku, but also for the regions. Experts note that there are dozens of populated areas where the availability of documents on house (purchased) from the population is not a topic.

On the other hand, a negative practice of illegal buildings has spread in the country. State Committee on Property of Azerbaijan continues to work on the inventory of illegal buildings in the country, today has developed a number of proposals to regulate the issues of illegal constructions, and they will be represented to the government.

As seen, in the area of registration of real estate, creating a registry (the rights to real property) in Azerbaijan still much to be done to fill the gaps. The activities to be conducted include creating cadastre, taking photos of land from satellites and other activities which would enable the country to take better position in the ranking of Doing Business index "registering property".