Review of construction sector in Azerbaijan (January-March 2015)

The construction work volume decreased by 5.5 percent and hit 1.515 billion manat in Azerbaijan in January-March 2015 compared to the same period of 2014, according to the Azerbaijani State Statistics Committee.

Some 61.9 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 17.8 percent - overhaul, 6.2 percent - current repair and 14.1 percent - other construction work.

According to the Azerbaijani State Statistics Committee, around 151,600 square meters of housing were commissioned in March compared to 150,800 square meters in the same period of 2014.

Around 415,400 square meters of housing have been commissioned since early 2015 or by 10.9 percent more than in the same period of 2014.

The prices decreased by 17.92 percent in dollar terms on the property market of Baku in the first quarter of 2015 and increased by 9.87 percent in manat terms.

The prices reduced by 16.38 percent in dollar terms on the housing market, while in manat terms they increased by 11.94 percent. The supply decreased by 8.3 percent. The exposure period increased by 14.8 percent compared to 2014. It decreased by 5.3 percent compared to the previous month.

The activity on the housing market increased in March. The population started to invest in real estate to save money from the expected inflation.

Primary housing market

The supply on Baku's primary housing market hit 512 in March or by 34 percent less than in the previous month and by 51 percent compared to March 2014.

According to MBA Group consulting company's report, most of supply on the market relates to the economy-class apartments (up to $ 1,000 per square meter) and middle class ($1,000-$1,600). The share of apartments in two price ranges is 43 percent of the total portfolio of supply. The average cost per square meter in these apartments is $795 and $1,220 respectively. The share of apartments worth more than $ 1,600 per square meter is 14 percent. During the reporting period, the average price on the apartments of this class was $ 2,080 per square meter.

The average cost per one square meter on Baku's primary housing market was $1,149 (1,206 manat) in March or by 16.38 percent less than in the previous month. The prices in manat increased by 11.94 percent.

For comparison, the price per one square meter on Baku's primary housing market was $1,374 (1,078 manat) in February 2015.

The average area of ​​apartments offered in March was virtually unchanged compared to February. It hit 115.65 square meters. The average area of ​​one-room apartments was 60.4 square meters, two-room - 91.24 square meters, three-room - 129.61 square meters, four-and five-room - 175.43 and 283 square meters.

According to the report, 42.1 percent of housing put up for sale on the primary market accounted for Yasamal district of Baku, 16.8 percent - Nasimi, 11.2 percent - Khatai, 9.6 percent - Narimanov, 7.6 percent - Absheron, 3.6 percent - Binagadi and Nizami, 2.5 percent - Sabail, 2 percent - Sabunchu district of Baku.

The average price per square meter on the primary housing market in Baku's districts is as follows:

Secondary housing market

According to MBA Group consulting company, the prices on one-room, two-room, three-room and multiple apartments, offered on the secondary housing market in Baku in March 2015, increased by 13, 7, 20 and 13 percent, respectively.

The average cost per square meter on the secondary housing market in Baku increased by 14 percent and amounted to 1,886 manat compared to February. The cost of housing in foreign currency decreased by 14.8 percent up to $1,796 during a month. For comparison: the price per square meter on the secondary housing market in Baku in February 2015 amounted to 1,654 manat ($2,108).

The cause of this difference is a change of the manat rate for the last ten days of February. Earlier, the reports were prepared in accordance with 0,7844 manat / USD exchange rate, while in March - 1,05 manat / USD.

In March, the most expensive apartment on the secondary housing market was near the Javanshir bridge - $ 2.3 million, while the cheapest one in the Bakikhanov settlement ($46,200).

The average market prices per square meter (in dollars) in Baku's districts in March 2015 are as follows:

The houses worth up to $ 2,000 (the average price - $1,541) per square meter accounted for the most part of the sales portfolio on Baku's secondary market in March.

Some 72.2 percent accounted for these houses. The apartments in the range of $2,000-2,500 per square meter (the average price - $2,217) accounted for 20 percent of a total sales volume.

The rest part (7.8 percent) accounted for the apartments. The price per square meter is more than $ 2,500 (the average price - $3,040).

The supply on the secondary market in Baku in March 2015 amounted to 1,866 or by 9.8 percent less than in the same period of 2014 and by 7.14 percent less than in the previous month.

Commercial real estate market

According to MBA Group consulting company, the number of commercial facilities put on sale decreased by 5 percent in Baku in March 2015 compared to the previous month.

Around 182 commercial facilities were put on sale in March, while in February the number reached 192. Meanwhile, around 75 transactions on commercial facilities were concluded in March.

The passivity on the commercial real estate market is connected with the devaluation which occurred in February 2015.

The major share (70 percent) of commercial facilities put up for sale accounted for "vacant land plots" (a type of sites which can be used as an office, a shop and other purposes), 14 percent - the service facilities, 10 percent - shops, 5.2 percent - offices, 0.8 percent - basements.

An average area of non-residential facilities was 236.4 square meters or by 24 percent more compared to the previous month.

The largest land plot in Baku was registered in Narimanov district of Baku - 2,500 square meters, the smallest land plot also in Narimanov district - 18 square meters.

A decrease in activity in March also caused an increase in an exposure period of the facility sale. An exposure period of non-residential facilities amounted to 188 days within a month.

In March, the average cost of a non-residential area decreased by 15.17 percent, reaching $3,748 per square meter, while in manat it increased by 13.56 percent up to 3,935 manat. The average rent per square meter in March was $14.35.

The price index in March 2015 decreased by 20 percent compared to the same period of 2014, but by 15 percent and hit 5.25 compared to February.

Changes in prices on non-residential areas depending on the zones:

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

Rental market

The number of deals on Baku's rental market decreased by 5 percent and hit 106 in March 2015 compared to February.

The average housing rental price hit 639 manat in Baku in March 2015. It decreased by 4 percent compared to February 2015 and by 9.4 percent more than in the same period of 2014.

The rent in dollars decreased by 28 percent last month (compared to February) and by 18.3 percent and hit 609 manat (compared to March 2014) in connection with the devaluation of the manat [February 21, 2015].

The rent per square meter increased by 5 percent up to 9.3 manat, but decreased by 21.52 percent up to $8.82.

The share of premium class housing in the portfolio of demand (rent is over 1,000 per month) declined by 7.6 percent, the economy class housing (less than 500 manat per month) - by 11.8 percent, the middle class housing (500- 1,000 manat) - decreased by 7.6 percent in March 2015.

The citizens expecting the commissioning of houses, which are being constructed, and migrants who have arrived in Baku for work, ensured the main part of demand on the rental market in March. A small part of demand accounted for tenants who signed the contracts for one or two months.

In general, the supply reduced by six percent to 261 last month.

"Taking into account a decrease of activity on the rental market, a decrease in the portfolio of supply can be considered as normal," the report says.

Two-room apartments are in great demand in March. Their share in a total volume of apartments put up for rent was 43.7 percent (39.3 percent in February). These apartments are followed by three-room apartments - 31 percent (33.2 percent), one-room - 20 percent (17.4 percent), four- and five-room apartments - 5.4 percent (10.1 percent).

The average rental price on one-room apartments was 362 manat, two-room - 569 manat, three-room - 805 manat, four-room - 1,158 manat last month.

Construction material market

The companies engaged in building material production in Azerbaijan, produced goods worth 111.5 million manat in January-March 2015, or 28.4 percent more than in the same period of 2014, according to the Azerbaijani State Statistics Committee's report.

During this period, Azerbaijan produced 639,100 metric tons of cement (a 16.1-percent increase versus the same period of 2014) and 48,800 metric tons of gypsum plaster (a 9.9-percent growth), the report said.

Azerbaijan also produced 305,300 metric tons of ready-mixed concrete (a 80.4 percent growth), 75,100 metric tons of asphalt (a 4.1 percent growth), 4,200 cubic meters of precast concrete building structures (a 57.1 percent decrease), 2,470 metric tons of processed marble, travertine, alabaster and items made of them (a 2.7 times growth).