Review of construction sector in Azerbaijan (January-May 2014)

Analysis Materials 14 July 2014 15:47 (UTC +04:00)

The construction work totaling 2.907 billion AZN was conducted in Azerbaijan in January-May, 2014, according to the Azerbaijani State Statistical Committee. The volume of construction work increased by three percent compared to the same period of 2013.

Some 62 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 18.7 percent - overhaul, 4.9 percent - current repair and 14.4 percent - other construction work. Some 80.5 percent of the construction work was carried out by non-state construction companies.

Main indices of construction sector in Azerbaijan in January-May 2014

Jan.-May, 2014

Compared to Jan.-May 2013

Commissioned: residential buildings, total area, thousand sq. m






Secondary schools, educational facilities



Pre-school educational institutions, facilities



Funds directed to fixed capital, in mln manat



- for the construction of production facilities



- for the construction of facilities in service sector



- for construction and installation work



Source: State Statistical Committee

Commissioning of housing decreased by 4.3 percent in May, compared to April 2014 and 21.6 percent compared to May 2013. Around 121,800 square meters of housing were commissioned in May, compared to 127,300 square meters in April. The highest figure in 2012 was fixed in June (250,800 square meters), while the best indicator for the whole history was observed in December 2011 (342,500 square meters).

Some 622,700 square meters of housing were commissioned in 2014 for the present, which is by 6.3 percent less compared to the same period of 2013 (664,400 square meters).

The prices in the real estate market fell by 1.02 percent in May, 2014, according to MBA Group consulting company. The prices in the housing market have risen by 13.6 percent since early 2014 and 29.9 percent compared to the same period of 2013.

The prices for the secondary housing increased by 1.78 percent, while the prices for the primary housing dropped by 4.45 percent in May. Nevertheless, in the annual basis, the prices in the primary housing market in Baku increased by 41 percent in May.

The fall in prices for the primary housing is due to the decrease of activity in the real estate market. In total, the current prices for the real estate are far from the real indicators. Therefore, relative decline in prices for housing will be inevitable in next two or three months, however, stabilization and slight increase in prices is expected in autumn.

The work on demolition of residential facilities in the Nariman Narimanov avenue (former Sovetskaya) is not a factor that can affect housing prices. The Cabinet of Ministers has adopted a decision on giving some 1,500 AZN worth compensation for each square meter of a residential facility. Over 10,000 families live in the Sovetskaya Street.

The amount of the compensation for the housing in the Sovetskaya Street, is not sufficient to buy a flat in the center of Baku. The average amount of the compensation is 60,000 AZN, which is sufficient to buy at best a two-room flat on the outskirts of the city. Therefore, this will not affect the prices for housing in general. On the contrary, the land prices are expected to increase.

The prices in the land market dropped approximately by two percent in May, while they have increased by 10 percent since early 2014.