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

According to the Azerbaijani State Statistics Committee, in January-November 2016 housing commissioning decreased by 7 percent in Azerbaijan from year to year.

Some 146,000 square meters of housing were commissioned in Azerbaijan in November 2016 compared to 168,300 square meters in October, 194,400 square meters in September, 213,700 square meters in June 2016 (the best index in 2016).

Some 1,519.8 square meters of housing were commissioned in Azerbaijan in January-November 2016 compared to 1,634.1 square meters in the same period of 2015.

Some 68 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 11.8 percent - overhaul, 3.8 percent - current repair and 16.4 percent - other construction work.

Some 87 percent of the total volume of construction work was carried out by non-state construction companies.

Real estate market

According to MBA Group consulting company, the prices on Baku’s primary housing market increased by 4.96 percent in dollar terms in November compared to October. The prices decreased by 14.77 percent since early 2016.

The prices increased on the land market and rental housing market. The prices increased by 1.8 percent in dollar terms on the land market for the month, while the prices have decreased by 28.85 percent on the market since early 2016. The prices increased by 0.68 percent on the rental housing market in November, but decreased by 26.04 percent for the year.

The prices decreased in other segments of the real estate market. The prices dropped by 1.75 percent on the secondary housing market in November and by 29.06 percent since early 2016. The prices decreased by 1.38 percent on the commercial property market compared to October and by 22.29 percent compared to early 2016. The prices decreased by 4.32 percent and 33.12 percent on the commercial property rental market respectively.

In general, the prices on the property market in November slightly declined by 0.67 percent. The prices have decreased by 25.41 percent since early 2016.

The price fluctuations on the market are connected with the so-called structural changes. There are several factors stipulating these fluctuations. For example, a very expensive facility or several cheap facilities may appear in the portfolio during the month, their prices affect the average cost of the portfolio. Therefore, such fluctuations occur. If the prices show a decreasing or increasing tendency for a few months, one can talk about the growth or decline on the market. But if the prices vary from month to month, it means that the market is virtually at a standstill.

Construction material market

The customs duties on a number of imported goods, including construction materials (bentonite, gypsum, cement, clinker), slabs, bricks, building blocks made of stone, gypsum, cement, asbestos and ceramic products have increased in Azerbaijan since November 1, 2016. This decision is used as a tool to stimulate domestic producers.

According to the Azerbaijani State Statistics Committee, the construction materials worth 319.1 million manat were produced in January-November 2016, or 11.4 percent less than in January-November 2015.

Cement production decreased by 14.6 percent up to 2,130.8 tons, gypsum plaster production – by 20.2 percent up to 141,400 tons, the report said.

The production of building blocks and cement bricks, artificial stone bricks or concrete bricks decreased by 37.9 percent up to 76,000 tons, while asphalt - by 14.8 percent up to 329,600 tons.

The production of bricks decreased by 25.2 percent up to 1,837 cubic meters, ready-mixed concrete decreased by 55.8 percent up to 3,876 tons, processed marble, travertine, alabaster and items made of them – by 38.2 percent up to 7,231 tons.

The production of building lime increased by 68 percent up to 24,741 tons, while precast concrete building structures increased fourfold up to 83,400 cubic meters in January-November 2016.

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