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

According to the Azerbaijani State Statistics Committee, the construction work totaling 5.195 billion manat was conducted in Azerbaijan in January-August 2014. The volume of construction work increased by 3.5 percent compared to the same period of last year.

Some 64.2 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 17.2 percent - overhaul, 5.7 percent - current repair and 12.9 percent - other construction work.

Around 80.6 percent of the construction work was carried out by the private construction companies.

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

Jan.-Aug. 2014

Compared to Jan.-Aug. 2013

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

1145,5

87,2

Hospitals

200

97,6

Secondary schools, educational facilities

5680

102,3

Pre-school educational institutions, facilities

892

114,8

Funds directed to fixed capital, in mln manat

10445,3

100,5

Including:
- for the construction of production facilities

7045,5

118,6

- for the construction of facilities in service sector

3399,8

80,876,4

- for construction and installation work

6596,77635,5

111,1

Source: State Statistics Committee

Commissioning of housing in Azerbaijan in August failed to reach a record level of 2013, when it exceeded two million square meters per year for the first time in the history. In August, the volume of housing commissioning reduced by 1.8 percent compared to July 2014, though it increased by 19.7 percent in August 2013.

According to the Azerbaijani State Statistics Committee, around 159,000 square meters of housing were commissioned in August compared to 161,900 square meters in July. Around 1.145 million square meters of housing were commissioned in 2014 or by 12.8 percent less than in 2013 (1.314 square meters).

Housing market

According to MBA Group consulting company, the prices on Baku's real estate market in August increased by only 0.1 percent. They increased by 7.6 percent by early 2014, while by 11.51 percent compared to the same period of last year.

At the same time, the rent of property was the most active segment of the market in August according to the seasonal factors, where the growth hit 5.65 percent compared to July, 11.79 percent since early 2014 and 10.23 percent every year.

The prices dropped in August only on the primary market. The prices reduced by 0.89 percent compared to July. But they have increased by 7.33 percent since January 1 and by 18.38 percent every year. A slight decrease in prices on the primary market was compensated through the growth on the secondary market by 1.69 percent, 16.47 percent and 27.49 percent respectively.

The situation on the land market also remained stable. The prices reduced by only 0.97 percent compared to July and 0.14 percent every year, but increased by 8.11 percent since 2014. The prices on commercial property increased last month by 0.55 percent and 0.29 percent every year. But they have reduced by 3.98 percent since early 2014. The rent of non-residential premises increased by 0.36 percent during a month.

The current state of the market allows predicting the growth of price parameters of the real estate market in the range of 4-6 percent as of 2014.

The Azerbaijani Central Bank stated that the property market turnover in January-August increased by 28.03 percent every year. As of September 1, 2014, the property market turnover (cash turnover of notary offices) amounted to 3.155 billion manat compared to 2.459 billion manat a year earlier.

The Central Bank stressed the decline in the share of mediators (banks, notary offices and realtors) in residential real estate transactions in January-August by 14 percent. As of September 1, 2014, the share of mediators was 257.970 million manat compared to 300.070 million manat a year earlier.

Building material market

According to the Azerbaijani State Statistics Committee, the companies producing building materials in Azerbaijan produced goods worth 288.2 million manat in January-August 2014, which is 18.9 percent more than in the same period of last year.

According to the report, during this period, Azerbaijan produced more than 1.91 million tons of cement (a 40.9 percent growth compared to the same period of last year), 125,100 tons of construction gypsum (a 34.4 percent decrease), more than 1.14 million tons of ready-mixed concrete (a 25.5 percent growth), 255,200 tons of asphalt (a 6.5 percent decrease).

Commercial facility market

According to MBA Group consulting company, the number of commercial facilities put on sale decreased by 29.7 percent in Baku in August 2014 compared to the previous month.

Around 121 commercial facilities were put on sale, while in July the number reached 172. Meanwhile, around 108 transactions on commercial facilities were concluded in August as in the previous month.

The major share (38 percent) of commercial facilities put on sale accounted for "vacant land plots" (a type of sites which can be used as an office, a shop and other purposes), 16 percent - the service facilities, eight percent - shops, five percent - offices, six percent - other facilities (warehouses, garages, basements, etc..).

The average area of non-residential facilities was 128.54 square meters or by 22 percent less compared to the previous month.

A decrease in the area of non-residential facilities can be explained by a decrease in supply for the sale of building sites with a large area.

The largest land plot in Baku was registered in Nasimi district - 720 square meters, the smallest land plot in Yasamal district - 12 square meters.

In August, the average cost of a non-residential area increased by 0.5 percent, reaching $3,857 per square meter. The average rent per square meter in August was $19.35.

The price index in August 2014 remained at the level of the previous month and was 5.4. The relative increase in rental prices in August was observed in the third and fourth zones of the city, while partial decrease - in the first and second zones.

Zones

July 2014

August 2014

%

First zone

18,89

18,5

-2,1%

Second zone

20,58

20,3

-1,4%

Third zone

16,89

18,03

6,7%

Fourth zone

8

8,1

1,3%

Average price

19,28

19,35

0,36%

Prices on non-residential areas change depending on their destination:

Land plots

July 2014

August 2014

%

Shops

4590

4426

-3,57%

Land plot

3773

3500

-7,24%

Service facilities

3423

3534

3,24%

Offices

2561

2545

-0,62%

Basements

1020

1022

0,20%

Industrial facilities

670

668

-0.30%

Average price

3836

3857

0,55%

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