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

According to the State Statistics Committee, in January-June 2011, the amount of construction works increased in Azerbaijan by 19.5 percent.

The construction works in the public sector amounted to 29.2 percent during the year, in the private sector - 70.8 percent.

Of the total construction works, 75.8 percent accounted for new construction, reconstruction and expansion, 15.7 percent - capital repair, 3.0 percent - current repair, 5.5 percent - other construction work.

Primary housing market

In June, the prices on the housing market in Baku remained unchanged as compared to the previous month and was 839 manat.

The prices fell by 1.1 percent by early 2011, by 3.1 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 continued development of the mortgage market and the beginning of the process of registration of new buildings after March increased the activity of buyers and sellers, which brought a revival to the market.

The exposure term of expensive new construction remained high, due to the fact that prices and volume of supply do not meet the actual needs of the market.

Secondary residential market

Average price on the secondary housing market in Baku in June dropped by 1.1 percent to $989 per square meter compared to $1,000 in May, the NGO Property Market Participants said.

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," the experts of the organization said.

In June, the volume of proposals on the secondary housing market increased by 0.8 percent compared to May.

The number of flats proposed on the market exceeded 6,955.

The increase in prices was not observed in any districts of Baku during a month. However, the largest decline in prices was observed in Sabunchu and Surakhani districts - 0.9 percent and 0.5 percent respectively.

The proportion of secondary residences proposed for the market at a price lower than the average, amounted to 56.2 percent.

The average room rate on the secondary market in June was 2.74, with the average price of each room at $43,634 and flat - $ 110,879.

The price index also fell by 2.2 points to 181.4.

The dynamics of the purchase and sale transactions decreased by 1.8 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 79.6 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 0.2 percent in June from $14,035 to $14,006 in Azerbaijan, NGO Property Market Participants said.

The main reason for the price decrease on Baku's land market is the sharp decline in demand, the report said.

The index of prices reduced from 236.9 to 236.2 points. The increase in prices was not observed in any districts of Baku.

The slight price decline was observed in Khazar and Sabunchu districts of the city (0.1 percent and 0.2 percent). The Binagadi and Khatai districts were active on the land market. Nasimi district was the most passive district.

The most expensive land was offered in Nasimi near Europe Hotel for $210,000 per 100 square meters, and the cheapest in the Absheron district (Pirekeshkul settlement) for $340 per 100 square meters.

About 772.6 hectares of land was proposed on the land market in Baku in June. About 77.8 percent fell to empty areas and the rest to new and old residential areas.

The term of land exposition increased by 0.8 percent compared to the previous month.

Commercial facilities

The average cost of property and the cost of rental housing used for commercial purposes in Baku decreased by 0.4 percent and 0.2 percent in June, the Participants of Property Market NGO said.

Proposals on the market increased by 2.3 percent in June. The average price of a non-residential facility amounted to $2.884 per square meter in Baku in June compared to $2,896 the previous month.

The share of commercial buildings, proposed on the market below the average price ($2,884 per hundred sq/m) amounted to 52.1 percent of the market portfolio.

The price decreased by 2.2 percent compared to the same period of 2010 and increased by .2 percent compared to the previous quarter.

The great decrease was observed in Sabunchu and Surakhani districts of Baku - 0.3 percent.

The dynamics of transactions increased by 3.4 percent compared to May.

The number of non-residential areas proposed to the market increased by 1.7 percent.

In June, the price index in Baku declined by 2.2 percent compared to the corresponding period of last year and by 0.3 percent compared to the previous quarter.

Building materials

In June, prices on the Baku building materials market increased by 0.73 percent compared to May, the NGO Property Market Participants reported.

Prices rose by 15.3 percent compared to early 2011 and by 1.2 percent compared to the same period of last year.

The share of domestic production in total volume of construction materials made up 53.8 percent .

Market share of domestic materials in the total portfolio value exceeded the share of imported goods in the 1.1 2 -fold in June.

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

"Basically, there was a rise in price of galvanized iron from Russia and Ukraine ," the statement said . "The prices rose by 10.94 and 13.64 percent respectively c ompared to May . "

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 an increase in price on different building materials. The same situation was observed in June.

According to a report, steel reinforcement produced by "Baku Steel Company" cheapened in June. A ton costs 780 manat compared 790 manat in May.

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

armature

-1, 27

laminated parquet

-0,38

galvanized iron

-1,03

cap stone

-0,27

insulation

-0,22

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

plywood

+4,15

galvanized iron

+9,20

chipboard

+1,34

rod

+5,00

square

+4,35

channel

+0,82

Prices for other construction materials remained stable.

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