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

According to the Azerbaijani State Statistical Committee, the construction work totaling 4.535 billion AZN was conducted in Azerbaijan in January-July 2014. The volume of construction work increased by 6.9 percent compared to the same period of last year.

Some 64 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 17.5 percent - overhaul, 5.6 percent - current repair and 12.9 percent - other construction work.

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

Source: State Statistics Committee

Commissioning of housing dropped by 19.8 percent in July compared to June and by 38.5 percent compared to July 2013, according to the Azerbaijani State Statistical Committee.

Around 161,900 square meters of housing were commissioned in July compared to 201,900 square meters in June.

Commercial real estate market prices in Baku will grow by 6 percent by the end of the year, and the market price for residential housing will increase by 15-16 percent, according to "MBA Group" consulting company.

However, in July, the prices of the commercial real estate market declined by 2.06 percent, and the residential housing market prices declined by 3.03 percent.

Compared to last year, prices initially increased, and therefore many buyers left the market. Therefore the activity of the market greatly decreased, which in its turn led to a decline in housing prices. The price reduction was also recorded in the primary and secondary markets - by 5.7 and 1.43 percent respectively.

The increase in property prices by 3-4 percent is expected this fall in Baku.

Primary housing market

Average price per square meter in the primary housing market in Baku for the year increased by 25 percent and amounted to 973 AZN ($1,241). For comparison, the price per square meter in the primary housing market in Baku in July 2013 amounted to 781 AZN ($996), according to a report by the MBA Group consulting company.

Since the beginning of 2014 the price of one square meter of housing in the primary market of Baku increased by 5 percent. In January of this year, the average price per square meter of housing in Baku was 926 AZN ($1,181).

The number of proposals in the primary housing market in Baku for the period amounted to 568, which is 35.5 percent more than the same period of last year (419 proposals).

The report states that 51.8 percent of the total portfolio of proposals accounts for economy class housing with the average price per square meter of $950, 45.1 percent for the primary business-class housing (an average of $1,500 per square meter), 3.2 percent for VIP-class (an average of $2,600 per square meter).

Luxury apartments are mainly located in Yasamal, Sabail and Nasimi districts of the capital.

38 percent of the housing offered for sale in the primary market accounts for Yasamal district of Baku, 14 percent - Nasimi, 12 percent - Khatai, 10 percent - Narimanov, and 9 percent for Nizami and Binagadi districts.

Secondary housing market

The average price per square meter in the 1-5 room apartments on the secondary housing market in Baku for the year increased by 22.6 percent and amounted to 1,627 AZN ($2,075). For comparison, the price per square meter on the secondary housing market in Baku in July 2013 amounted to 1,327 AZN ($1,692), according to the report of the MBA Group consulting company.

From the beginning of 2014 the price per one square meter on the secondary housing market increased by 10.7 percent. For comparison, in January of this year, the average price per square meter of housing in Baku amounted to 1470AZN ($1,874).

The highest price per square meter on the secondary housing market in July was recorded in Sabail district of the capital - $2,735 per square meter. Price in Nasimi district of Baku was $2,334 per meter, in Narimanov district - $2,156, in Yasamal - $2,087, in Binagadi district - $2,037, and in Nizami - $1,899.

According to the report, most of the portfolio sales on the secondary market of Baku in July amounted to cheap houses, which accounted for 54.47 percent. Luxury apartments amounted to 45.53 percent of total sales.

Reducing of the number of purchase and sale transactions on the secondary housing market by 0.42 percent resulted in an increase in exposure time of the real estate, which was 84 days for the period.

The number of proposals on the secondary market in Baku for the period amounted to 2,152, which is 7.35 percent more than the same period of last year.

According to the report, 23 percent of the houses offered for sale on the secondary market fell on Yasamal district of Baku, 22.3 percent - on Nasimi, 14.3 percent - on Narimanov, 10.3 percent - on Binagadi, and 8.3 percent - on Khatai.

Most of the portfolio sales (35.9 percent) on the secondary housing market account for the three-room apartments, 32.6 percent - two-room, 19.4 percent - one-room, 10.4 per cent - four-room, 1.7 percent - five-room apartments.

Reducing of prices on the secondary housing market of Baku in July compared to the previous month of this year is due to the fact that prices have peaked, MBA Group experts say.

Building material market

The companies, engaged in the production of building materials in Azerbaijan, produced building materials worth 249.2 million AZN in January-July 2014, which is 22.6 percent more than in the same period of last year, according to the report of the Azerbaijani State Statistics Committee as of the first seven months.

During the period Azerbaijan produced about 1.66 million tons of cement (42.1 percent growth compared to the same period of last year), 63,800 tons of construction gypsum (a 46.1 percent decrease), more than one million tons of ready-mixed concrete (a 26.6 percent growth), 172,900 tons of asphalt (a 20 percent decrease), according to the report.

Main indices of construction sector in Azerbaijan: