Review of construction sector in Azerbaijan ( january-september 2011)

According to the State Statistics Committee, in January-September 2011, the amount of construction work increased in Azerbaijan by 24.5 percent.

The construction work in the public sector amounted to 26.5 percent of the total volume of construction work, in the private sector - 73.5 percent.

Of the total construction work, 75.7 percent accounted for new construction, reconstruction and expansion, 16.6 percent - capital repair, 3.1 percent - current repair, 4.6 percent - other construction work.

The construction sector will revive in Baku until by the end of this year and until May next year on the eve of Eurovision-2012 song contest. This will concern mainly the construction of tourist and recreational facilities, infrastructure and transport projects.

Housing commissioning in Azerbaijan increased by 3.8 times in September 2011, compared to August. According to the State Statistics Committee, 263,800 square meters were commissioned in September compared to 69,800 square meters in August. In 2011, 1.351,200 square meters of housing, or 25.67 per cent were commissioned in January-September 2010 (1.075,200 square meters). In September 2010, 168,700 square meters of housing were commissioned.

Primary residential market

According to the Property Market Participants public organization, the prices in the primary housing market of Baku remained unchanged at 837 manat in September compared to the previous month.

The decline in prices was at 1.3 percent compared to early 2011, and 3.1 percent compared to the same period of 2010. The prices fell by 29.9 percent compared to the crisis period (September 2008).

The primary housing market recorded a seasonal revival and activity in September.

In September, the number of the ready, unsold buildings and buildings under construction in Baku was 426 compared to 428 and construction companies - 152 compared to 153 in August.

The index of prices remained stabile in September and hit 320.7 points.

In September, most of the apartments in new buildings were three-room. The average area of one-room apartment in new building in August amounted to 60.7 square meters, two-room - 92.1 square meters, three-room - 131.8 square meters, four-room - 182.9 square meters and five -room 238.3 square meters.

Secondary housing market

Average price on the secondary housing market in Baku in September dropped by 1.4 percent to $966 per square meter compared to $980 in August.

"The situation occurring on the market negatively affected the pace of housing construction resulting in limited rehabilitation opportunities, and turnover of new buildings. This led to lower prices of new buildings entering the secondary market.

In September, the volume of proposals on the secondary housing market increased by 1.2 percent compared to August. The number of flats proposed on the market exceeded 7,200.

The share of Yasamal, Nasimi, Narimanov and Khatai districts in the proposal portfolio was 78.7 percent. The formation of the portfolio is linked with the appearance of new buildings on the market.

The increase in prices was not observed in any districts of Baku during a month. However, the largest decline in prices was observed in Surakhani district - 2.7 percent.

The proportion of secondary residences proposed for the market at a price lower than the average, amounted to 52.7 percent. The average room rate on the secondary market in September was 2.78, with the average price of each room at $43,453 and flat - $111,232.

The price index also fell by 2.5 points to 177.2.

The dynamics of the purchase and sale transactions decreased by 0.9 percent.

The main reason is the inactivity on the market due to the summer season.

Land market

According to the Property Market Participants public organization, in September, the average price for land in Baku decreased by 0.8 percent from $13,814 to $13,421 per one hundred square meters.

Baku land prices decreased primarily due to a sharp decline of demand.

Prices did not increase in any of the city's districts.

Binagadi and Khatai districts were most active on the land market. Nasimi district was the most inactive.

According to the information, in September, the most expensive land plot was offered for sale in Nasimi district at a price of $350,000 per one hundred square meters (a place near to the air ticker office), and the cheapest one was offered for sale in Absheron district - in settlement Pirekeshkul - at a price of $350 per one hundred square meters.

In September, Baku's land market offered for sale 777,300 land hectares, of which 78.8 percent were empty plots and the rest were uninhabited and old inhabited plots.

The term of land exposition on the market rose by 1.1 percent against the previous month.

Commercial facilities

The average cost on property and rental housing for commercial purposes decreased by 0.3 percent and 0.2 percent on the non-residential facility market in Baku in September.

The number of purchase and sale commercial property transactions decreased by 4.5 percent in September. Proposals decreased by 1.4 percent.

The average price of a non-residential facility amounted to $2.868 per square meter in Baku in September. According to the research, compared to the same period of 2010, the price decreased by 3 percent and by 0.6 percent compared to the previous quarter.

The share of non-residential buildings, proposed on the market below the average price ($2,868 per hundred sq/m) amounted to 53.1 percent of the market portfolio.

The price on the non-residential facilities did not increase in any districts of Baku. The most significant decline occurred in the Khazar district - by 1.4 percent.

The non-residential areas mainly composed of private buildings and apartments on the first and second floors of new buildings, as well as apartments on the first floors in August 2011 as a month earlier.

Zones

Average price in September

Difference in price in %

I zone

4856

-0,1

II zone

3462

-0,2

III zone

2110

-0,2

IV zone

751

-1,2

The decline in market prices and relative decrease of the dynamics in this segment, low volume of proposal led to increased exposure time by 2.4 percent.

In September, the price index in Baku declined by 2.7 percent, compared to the corresponding period of last year, and 0.5 percent, compared to the previous quarter. Compared to August, the price index for commercial facilities declined by 0.3 percent or 0.9 points - up 283.2 points.

Building materials

According to the Property Market Participants public organization, in September, prices on the Baku building materials market rose by 1.73 percent compared to August.

Prices rose by 18.8 percent compared to early 2011 and by 23.1 percent compared to the same period of last year.

The share of domestic production in total volume of construction materials made up 51 percent in September. 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 an increase in price on different building materials. The same situation was observed in September.

Road metal, zinc layers and glass rose in price in September.

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

sand

+ 4,3

iron pipes

+3,0

road metal

+14,3

iron layers

+5,2

gravestone

+4,6

zinc layers

+10,9

fibreboard

+3,2

rolled wire

+4,3

armature

+2,5

glass

+10,8

square

+3,5

insulation

+21,2

channel

+0,7

laminated plastic

+1,3

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

Sawn stone

-8,9

Roofing slate

-5,4

Wood

- 7,1

Lambrin

-7,1

Dikt

- 1,6

Electrode

-3,6

Prices for other construction materials remained stable.

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