Review of construction sector in Azerbaijan (January 2012)

According to the State Statistics Committee, in January 2012, the amount of construction work increased in Azerbaijan by 42.5 percent compared to the corresponding period of last year.

The construction work conducted by state companies hit 28.1 percent of the total volume and 71.9 percent - by private companies.

Of the total construction work, 75.9 percent accounted for new construction, reconstruction and expansion, 13.8 percent - capital repair, 3.2 percent - current repair, 7.1 percent - other construction work.

Housing commissioning volumes in Azerbaijan dropped by 2 times in January, compared to December and increased by 2 times compared to January last year.

According to the Azerbaijani State Statistics Committee, about 168,200 square meters of housing were commissioned in January compared to 342,500 square meters in December (the best index last year) and 82,100 square meters in January 2011.

Primary residential market

According to the "Property Market Participants" public organization, the prices on the housing market in Baku were not changed in January 2012 compared to the previous month and amounted to 825.2 manat per square meter.

Source: Property Market Participants" public organization

The prices dropped by 1.4 percent compared to the previous quarter and by 2.7 percent in January last year. Compared to the beginning of the crisis period (September 2008), prices fell by 30.9 percent.

As in previous months, monitoring of Baku's primary housing market covered 424 high-rise apartment buildings in January, and the number of construction companies remained the same - 151.

Like the previous months, in Jan. most of the apartments in new buildings were three-room.

The average area of one-room apartment in new building 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 market

Certain increase in demand and supply in January led to a relative revival in Baku's secondary market, compared to February.

However, the index of average prices was not changed. According to the Public Organization "Property Market Participants", the index of average prices on one square meter was $955, and on one apartment - $111,334. As in previous months, the share of Yasamal, Nasimi, Narimanov and Khatai districts in the total portfolio of proposals amounted to an absolute majority, and their combined share amounted to 74.5 percent.

The situation with the rooms was not changed as in previous months. The reduction in the number of 4-and 5-room apartments was observed. The maximum reduction was observed for 4-and 5-room apartments, while the share of 1 -, 2-and 3-room apartments in a portfolio of proposals has increased. The maximum growth of 1.2 percent was observed for 2-room apartments.

The experts consider relative recovery in the "secondary housing" as natural. People prefer to invest more in secondary housing than in buildings with poor utilities and land plots. And this affects to the relative increase in activity. However, commenting on the factors negatively affecting the recovery in the market, one expert said that the main obstacles for activity in the market are the primacy of market prices and the weak mortgage lending.

No significant changes in the prices were observed amid the general stability in the secondary market in January and in other major towns across the country. Experts predict that prices will remain stable in the next few days.

Prices at the secondary housing market in different places of the capital and major towns of the country, in thousands of dollars:

Land market

According to the "Property Market Participants" public organization, in January the average price on one hundred square meters of land in Baku increased by 1.3 percent - from $13,694 to $13,806.

The main reason for the increase in prices was the increase in demand for private homes and land plots with the documents due to the demolition of old housing in the capital.

The prices increased in most districts of Baku in Jan., but the highest growth was observed in Garadagh district, which was 1.9 percent. Along with this, Binagadi and Garadag districts were relatively active in the land market. The most passive was Nasimi district. The most expensive land plot was offered at the market in Nasimi district of Baku in Jan. (near the tea factory) for $350,000 per one hundred square meters, the cheapest one - in the Absheron district (Pirekeshkul settlement) for $ 350 per one hundred square meters.

About 79.1 percent of the total area of ​​769.5 hectares of land offered at the market in January fell to empty areas, and the remaining area was other residential areas and older residential areas. Despite the large number of proposed land plots, demolition work in the city center and near the center of housing and private homes increased demand by 1.3 per cent.

The land exposition term on the market increased by 0.7 per cent the previous month, but the degree of risk for this type of property continues declining. Within a month the number of concluded deals increased, and the activity on this segment changed in a positive way.

Market research shows that the land plots in the city center are limited. As a consequence, prices on plots located in areas outside the center increase.

The recent demolition of private houses in the center and the increase in demand for formalized land plots will promote the growth of prices.

The interest in this property is still low due to the fact that the land plots can not be taken as collateral in the mortgage process, the experts of the organization said. Meanwhile, the processes occurring in the last few months on the land market, reduced the risks of transactions in this market segment.

Building materials

According to the "Property Market Participants" public organization, in January 2012 the market prices on construction materials decreased by 0.33 percent compared to the previous month.

The average price increased by 14.8 percent compared to early 2011 and declined by 0.4 percent compared to the previous quarter.

The share of domestic products in the total amount of building materials was 52 percent, surpassing the goods imported into the country by 0.1 percent compared to the previous month.

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

The beginning of the year is always characterized by stagnation in all segments of the real estate market. The building materials market is not the exception. This led to the stabilization and reduction of prices.

The prices on 9 of 10 building materials changed.

In January, there was reduction in price on wood, iron pipes and other building materials.

The summary table has the building materials, which prices reduced (in percentages):

The prices on zinc layers imported from Russia and Ukraine increased in January (0.5 percent),

Prices on other building materials remained stable.

According to the State Statistics Committee, in January, the companies engaged in production of building materials in Azerbaijan produced goods worth 16.9 million manat, which is 1 percent less than in January 2011.

In January of 2012 about 98,100 tons of cement, 4,300 tons of construction gypsum, 46,700 tons of finished concrete were produced.

During the reporting period about ​​16,500 tons of asphalt, 4,400 cubic meters of prefabricated concrete constructions, 15,000 cubic meters of building bricks were produced.

By February 1, 2012 there were stocks of finished construction products worth 9.7 million manat at the warehouses of the enterprises, or 3.4 percent of the total finished product, available in the warehouses of the country.