Review of construction sector in Azerbaijan (January-May 2011)

According to the State Statistics Committee, in January-May 2011, the amount of construction works increased in Azerbaijan by 20.5 percent.

The construction works in the public sector amounted to 30.2 percent during the year, in the private sector -69.8 percent.

Of the total construction works, 74.4 percent accounted for new construction, reconstruction and expansion, 16.6 percent - capital repair, 3.2 percent - current repair, 5.8 percent - other construction work

First residential market

In May, the prices on the housing market in Baku reduced by 0.2 percent and hit 839 manat compared to the previous month.

"The prices fell by 1.1 percent by early 2011, by 3.6 percent compared to the same period of last year and by 29.7 percent compared to the crisis period (September 2008)," the organization said.

The passivity, observed in the primary housing market in April, changed by relative activity in May.

In May, three new buildings in Yasamal, Nasimi and Nizami districts of Baku were withdrawn from sale. The number of built but not sold buildings and new buildings in Baku hit 434 compared to 437 in April as new buildings were not put on sale that month. The number of construction companies per month decreased from 155 to 154.

Most new buildings are built in Yasamal, Khatai and Nasimi districts.

Secondary residential market

Average prices on the secondary housing market in Baku in May dropped by 1.3 percent to $1,000 per square meter compared to $1,013 in April.

Processes occurring on the market negatively affected the pace of housing construction resulting in limited rehabilitation opportunities, and turnover of new buildings.

This, in turn, led to lower prices of new buildings entering the secondary market. In May, the volume of proposals on the secondary housing market increased by 0.9 percent compared to April.

The prices decreased in the Sabunchu district of Baku, the report said.

The proportion of secondary residences proposed for the market at a price lower than the average, amounted to 56.5 percent.
The average room rate on the secondary market in May was 2.74, with the average price of each room at $43,651 and house - $ 111,656.
The price index also fell by 2.6 points to 183.6. Proposals on the market increased by 0.9 percent. Roughly 6,900 flats were proposed on the market.
The dynamics of the purchase and sale transactions decreased by 1.6 percent.

The most attractive areas in the secondary housing market of Baku were Khatai and Yasamal. In general, the bulk of operations in the mortgage process fell to these districts.
The share of Yasamal, Nasimi, Narimanov and Khatai districts in the proposal portfolio was 79.1 percent. The formation of the portfolio is linked with the entry of new buildings on to the market.

Land market

The average price for 100 square meters of land decreased by 0.4 percent in May from $14,096 to $14,035in Azerbaijan, NGO Property Market Participants said.
The main reason for the price decrease on Baku's land market is the sharp decline in demand,

Price decline were observed in all zones of the city. Along with this, in May, the rise in prices was observed in Garadagh and Khazar districts - by 0.1 percent.
The most considerable decline was recorded in the Sabunchi district - by 0.4 percent. The most active districts in the land market were Binagadi and Khatai. The most passive was Nasimi district.

The most expensive land was offered in Nasimi near Europe Hotel for $210,000 per 100 square meters, and the cheapest in the Pirekeshkul settlement in Absheron for $350 per 100 square meters.

About 776.1hectares of land was proposed on the land market in Baku in May. About 78.6 percent fell to empty areas and the rest to new and old residential areas.
The term of land exposition increased by 1.1 percent compared to the previous month.

Commercial facilities market

The average cost of the property and the cost of rental housing used for commercial purposes decreased by 0.3 percent and 0.1 percent respectively on the market of non-residential facilities in Baku in May.

Proposals on the market increased by 2.3 percent. The number of purchase and sale commercial property transactions increased by 3.6 percent in May.

Despite the processes occurring on the real estate market, this marks a stabilization of the risk level, which is linked with the strengthening of the coefficient of profitability in relation to prices for rent.

According to the research, the price for the same period of 2010 decreased by 1.8 percent, but increased by 0.9 percent compared to the previous quarter.
The average price of a non-residential facility amounted to $2.896 per square meter in Baku in May.

The share of non-residential buildings, proposed on the market below the average price ($2,896 per hundred sq/m) amounted to 52.1 percent of the market portfolio.

The price on the non-residential facilities did not increase in any districts of Baku in May. The most significant decline occurred in Sabunchu and Surakhani districts - by 0.4 percent.

The non-residential areas mainly composed of private buildings and apartments on the first and second floors of buildings in May 2011.

Building materials

In May, prices on the Baku building materials market increased by 0. 87 percent compared to April.

Prices rose by 1 4.4 percent compared to early 2011 and by 21.8 percent compared to the same period of last year.

Market share of domestic materials in the total portfolio value exceeded the share of imported goods in the 1.16 -fold in May.

Monitoring was conducted on 38 items and 88 types of building materials.

According to conducted studies, relative market activization was observed on the building materials market, which is typical for this season.

In February, the market observed a n increase in price o n different building materials. The same situation was observed in May.

"Basically , there was an increase in price of paint products. The prices increased by 10-15 percent compared to April. Local manufacturers attribute this to the rise in price on chemical products imported into the country and used in the production of (titanium, alkyd, tutkal) in the world markets."

The summary table shows the construction material prices, which declined (in percentage):

The summary table shows prices increase on the construction materials (in percentage):

Prices for other construction materials remained stable.