Review of construction sector in Azerbaijan (January 2017)

Some 107,600 square meters of housing were commissioned in Azerbaijan in January 2017 compared to 133,700 square meters in January 2016, the Azerbaijani State Statistics Committee said.

Housing commissioning decreased by 19.5 percent in Azerbaijan in January 2017.

According to the report, 673.4 million manat, that is, 70.6 percent of capital investments were spent directly for construction and installation work, which is by 6.4 percent less compared to the same period of 2016.

Some 851.8 million manat or 89.3 percent of funds were directed for the construction of production facilities, 73.9 million manat (7.7 percent) - facilities in the service sector, 28.5 million manat (three percent) - housing construction.

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

Real estate market

According to the MBA Group consulting company, prices continue to increase in Baku’s housing market despite low demand and low activity.

The prices increased by 2.7 percent in the primary housing market, 2.94 percent - secondary housing market, 3.6 percent – land market in January 2017.

The price growth is higher than the pace of construction and activity in Baku’s housing market.

Relative activity has been observed in the market since December 2016, which is related to the activity of the Azerbaijan Mortgage Fund.

Construction companies faced the problem with the sale of facilities in Azerbaijan.

Construction materials greatly rose in price amid the depreciation of the national currency.

The current situation affects the prime cost of construction. The prime cost of construction increased by 3.9 percent in December 2016, while by 4.1 percent in January 2017.

The prime cost growth affects the business of construction companies, which is constantly deteriorating.

The situation greatly worsened in the primary housing market.

The ratio between the primary housing market and the secondary housing market (the number of offers) was 109 percent in 2010 when the growth of construction pace and sales was observed. This figure decreased up to 26 percent in 2016.

Construction material market

According to the Azerbaijani State Statistics Committee, the construction materials worth 28.8 million manat were produced in January 2017, which is by 2.4 times more than in January 2016.

Cement production increased by 40 percent up to 139,700 tons, while the production of building lime – by 2.3 times up to 2,469 tons.

The production of building blocks and cement bricks, artificial stone bricks or concrete bricks increased by 4.1 times up to 8,918.7 tons.

The production of bricks increased by 3.4 percent up to 13,200 cubic meters, precast concrete building structures - by 12.4 times up to 13,600 tons, processed marble, travertine, alabaster and items made of them – by 2.9 times up to 382.4 tons.

The production of gypsum plaster decreased by 39.9 percent up to 7,700 tons, asphalt - by 56 percent up to 9,400 tons, ready-mixed concrete – by 63.4 percent up to 13,400 tons in January 2017, the report said.

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