Review of construction sector in Azerbaijan (January-October 2013)

The analysis of development trends in the Azerbaijani construction industry allows evaluating the enormous potential of the industry.

The volume of construction work increased by 8.2 per cent to 6.4 billion manat in Azerbaijan in January-October 2013 compared to the same period of 2012, the Azerbaijani State Statistics Committee said.

According to the committee, some 66.4 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 17.7 percent - overhaul, 2.9 percent - current repair and 13 percent - other construction work.

Some 79.5 percent of the construction work was carried out by non-state construction companies.

Main indices of construction sector in Azerbaijan in January-October 2013

Source: State Statistics Committee

According to the Azerbaijani State Statistics Committee, around 246,400 square meters of housing were commissioned in October 2013 compared to 164,100 square meters in September, and 139,300 square meters in October 2012. Around 1.724 million square meters of housing were commissioned in January-October 2013 or 28.97 percent more than in the same period of 2012 (1.337 million square meters).

Building material market

The companies engaged in producing building materials in Azerbaijan, made goods worth 287.4 million manat in January-October 2013, which is 17.4 percent more than the same period of 2012, the State Statistics Committee said.

According to the information, the companies produced 1.7 million tons of cement (a 4.5 percent growth per year), 153,400 tons of construction gypsum (a 33.8 percent growth) and 1.152 million tons of ready-mixed concrete (an 11.4 percent growth) in January-October 2013.

Stocks of construction materials worth 17.6 million manat, which is 6.7 percent of the total finished goods in the country, were created at the warehouses of enterprises as of November 1, 2013.

Housing market

The prices on Baku's real estate market will increase by 10-11 percent by late 2013. According to MBA Group consulting company, the changes on the market have changed the forecasts. The prices are expected to be increased by early 2014. The prices were forecasted to increase by 5-6 percent in early 2013. As of November 1, the prices will increase by 9.9 percent. The prices increased due to an increase in the population's income.

As for the cheap apartments, the cheapest apartments were on the outskirts of Baku, namely, in Bilacari settlement of Binagadi district, as well as in Bulbul and Amirajan settlements in Surakhani district in October 2013. The cheap apartments can be found in other districts, the Property Market Participants company said.

The minimum price on a one room apartment, offered on the Azerbaijani market, is 23,510 manat. This refers only to the apartments in old houses. As for the new buildings, the price on apartments in such buildings in most cases is determined by construction firms per 1 square meter. There are some cases when people who have already bought apartments in new buildings sell them on the basis of the prices set by firms.

Meanwhile, a price growth tendency stopped on Baku's primary real estate market in October. However, the cost of apartments in new buildings increased compared to early 2013.

The average price on the primary real estate market decreased by 4.1 percent in October compared to September. In particular, one square meter of housing in new buildings is offered for $1,070 compared to $ 1,116 in September.

The prices on the primary market increased by 20.4 percent compared to early 2013, while by 20.6 percent compared to the same period of 2012. The house price on the secondary market increased by 1.03 percent from $1,748 to $1,766 per square meter in October.

The prices in this segment of the real estate market have increased by 17.1 percent since early 2013 while by 18.3 percent compared to the same period of last year. The prices on land plots have decreased by 3.4 percent from $18,419 to $17,790 per 100 square meters for the last month.

A 4.3 percent growth has been observed in this market segment for 10 months, while 7.8 percent price decrease per annum. A square meter of commercial real estate increased by 2 percent in October (from $4,223 to $4,308).

The prices in this category increased by 30.1 percent in January -October, while by 30.4 percent per year. The rental price of commercial facilities increased by 8.8 percent - from $18,790 to $20,440 per square meter. The prices have decreased by 2.8 percent for 10 months and by 0.6 percent for 12 months. The rental price of apartments also decreased.

So, the price decreased by 3.3 percent in October compared to September. So, the average rental price per square meter of housing in Baku was $11.46 in September, while $11.08 in October. The rental price of apartments reduced by four per cent compared to early 2013, while by 1.4 percent per annum. In general, the prices on Baku's real estate market increased by 0.17 percent in October compared to September. The prices have increased by 9.4 percent for 10 months, while by 9.9 percent per annum.