Review of construction sector in Azerbaijan (January-April 2016)

Some 69.6 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 11.8 percent - overhaul, 2.5 percent - current repair and 16.1 percent - other construction work.

Some 89 percent of the total volume of construction work was carried out by non-state construction companies.

According to the Azerbaijani State Statistics Committee, some 109,000 square meters of housing were put into operation in Azerbaijan in April 2016 compared to 65,200 square meters in March and 175,000 square meters in April 2015.

Some 443,700 square meters of housing have been put into operation in Azerbaijan since early 2016 compared to 589,500 square meters in the same period of 2015.

According to the MBA Group consulting company, the real estate prices slightly decreased by 3.59 percent in manats and 0.52 percent in dollars on Baku's market in April 2016 compared to March.

The primary housing prices in manats decreased by an average of 2.24 percent [while in dollars increased by 1.02 percent]. The secondary housing prices in manats decreased by 1.57 percent [while in dollars increased by 1.71 percent].

The land plot price in manats for the month decreased by an average of 1.73 percent, while in dollars increased by 1.55 percent. Great activity is observed on the land market compared to other markets. This is connected with the beginning of the summer season. Nevertheless, the general activity decreased by 7-8 percent on the real estate market compared to March.

The exposure period increased as a result of the poor activity. Earlier, the exposure period averaged 111-112 days on the real estate market, but now - 115 days.

The commercial property prices greatly decreased. The prices in manats decreased by 8.83 percent, while in dollars - by 5.79 percent.

The commercial property rent decreased by an average of 6.75 percent in manats [3.64 percent in dollars], while housing rent - 2.3 percent [in dollars - a 0.96 percent growth].

The recent rise in oil prices has had a certain influence on the stabilization of real estate prices. The oil prices have not greatly changed to impact on the real estate market. There is a certain threshold of oil prices. After reaching this threshold, the impact of oil prices will increase on the real estate market, that is, $50-60 per barrel.

There is no direct dependence between oil prices and property prices. However, the oil prices may affect the housing prices through a number of factors, which vary depending on the oil prices. Among these factors are the monetary base volume, the exchange rate, GDP growth rates, employment, inflation, etc.

The real estate prices in manats decreased by 1.96 percent on Baku's market in March 2016 (in dollars - 0.31 percent) compared to February. The primary housing price in manats increased by 1.41 percent (in dollars - 3.98 percent), while the housing price in manats on the secondary market increased by 3.84 percent (in dollars - 3.43 percent). The prices in manats on both markets have increased by 20.65 and 0.3 percent, respectively, since early 2016 but decreased by 18.27 and 30.24 percent in dollars respectively.