Review of construction sector in Azerbaijan (january 2013)

Analysis Materials 16 March 2013 14:05 (UTC +04:00)

The volume of construction work increased by 30 percent to 378.1 million manat in Azerbaijan in January 2013 compared to January 2012, the State Statistics Committee said

Around 64.1 percent of the total volume of construction work fell to primary construction, reconstruction and expansion, 12.3 percent - overhaul, 4.3 percent - current repair, 19.3 percent - other construction work.

In January 2013, the volume of housing commissioning in Azerbaijan fell by 22 percent compared to January 2012. According to the State Statistics Committee, in January 2013 131,200 square meters of housing were commissioned compared to 198,300 square meters in December. In January 2012, housing commissioning hit 168,200 square meters, and the best indicator was recorded in December 2011 - 342,500 square meters.

Main indicators of construction sector in Azerbaijan in January 2013

January 2013

Compared to January 2012

Commissioned: housing, total area, ths. Square meters



Comprehensive schools, educational facilities



Preschool facilities



Funds directed to the fixed capital, mln. manat




- construction of production facilities



- construction of facilities in the sphere of services



Construction and assembly work



Source: State Statistics Committee of Azerbaijan

In 2013, according to experts of the construction sector, an increase is expected in the price of the real estate market of Azerbaijan, which will be primarily observed in residential areas. Doubling of the budget funding for grant of preferential mortgages will contribute to it. This will lead to increasing activity in the real estate market, and higher prices. In addition, preparations for major international events, including the European Olympic Games to be held in Baku in 2015, will have an impact on the real estate market

As part of the preparations major construction and improvement work is envisaged, which contributes to the attraction of additional resources to the real estate market.

In addition, implementation of a plan of resettlement of residents of former "Sovetsky" and "Kubinka", because these territories are outdated in moral and physical terms, will also impact the housing market. These housing areas do not meet today's requirements, therefore, they are going to be demolished. The construction work to be conducted in these territories, as well as issuing compensation to the residents will lead to an increase in funds aimed at housing market.

Given these factors experts forecast 5-6-percent rise in price of property in 2013 in the country.

According to MBA Group consulting company, real estate prices will increase by five to six per cent in Baku in 2013. Prices will continue increasing in the market in 2013

However, the country will take certain actions to prevent the strong price growth, including measures to restrict the growth of the money supply on the market. One can expect low inflation in 2013 as a result of reducing the inflation growth rate by late last year. Moreover, oil and gas prices have recently declined. All these factors must halt the growth of real estate prices.

He said that one can expect low prices on the land market. The prices are not expected to increase in the land market. The construction sector must be as active as in the pre-crisis years of 2002-2007, but this is not expected in 2013.

The housing market is expected to increase by six to seven per cent," he said. "The market of commercial facilities will not increase by more than two to three per cent. In 2012 a relatively high growth was fixed in the housing market by 8.5 per cent (in 2012 one square metre of housing in Baku cost on average $1314 and in 2011 - $1214).

Companies engaged in manufacturing building materials in Azerbaijan in Jan. 2013, produced goods worth 22.7 million manat, which is 56.7 per cent more than in January 2012, State Statistics Committee said.

According to the information, the companies produced 129,800 tons of cement (annual growth of 18.1 per cent), 19,800 tons of gypsum plaster (up by 4.3 times), 88,100 tons of finished concrete mixture (up by 61.4 per cent) and 24,300 tons of asphalt (up by 1.6 times) in January 2013.

The stocks of finished construction products worth 13.8 million manat, which is 4.3 per cent of the total finished goods at the warehouses of the country, were held at the storerooms of enterprises by Feb. 1, 2013.