Review of construction sector in Azerbaijan (January-February 2011)

In January-February 2011, the amount of construction works increased in Azerbaijan by 7.1 percent.

Of the total construction works, 68.1 percent accounted for new construction, reconstruction and expansion, 20.2 percent - capital repair, 5.0 percent - current repair, 6.7 percent - other construction work

The construction works in the public sector amounted to 35.8 percent during the year, in the private sector - 64.2 percent.

Total area of residential buildings put into operation in Azerbaijan in January-February 2011 reached 149,400 square meters, which is 3.9 percent more than the same period of last year.

Investments in the construction of production facilities totaled 600.6 million manat, which is 20.8 percent more than 2010, construction of facilities in the service sector - 519.7 million manat, which is 19.1 percent more than the same period of last year.

Total investment in the main capital during this period amounted to 1.12 billion manat dropping by 1.7 percent. Primary means of expenditure on building and construction works amounted to 623.1 million manat, which is 20.9 percent less than 2010.

First residential market

The prices on Baku's primary housing market remained unchanged in February, but fell by 1.9 percent compared to the previous quarter, the NGO Participants of Property Market reported.

"The decline in prices reached 4 percent compared to February 2010 and 29 percent compared to the crisis period (September 2008)," the NGO reported.

The price index remained unchanged at 324.7 points.

Average prices for primary housing in Baku amounted to 848 manat per square meter in February, the report said.

The number of buildings under construction was 442 and 81 have already been built or are nearing completion.

Secondary residential market

Average prices on the secondary housing market in Baku in February dropped by two percent to $1,007 per square meter compared to $1,028 in January.

Processes occurring on the market negatively affected the pace of housing construction, which led to limited opportunities for restoring new buildings and transferring them into circulation.

An increase in prices was not observed in any Baku districts this month, the report said.
The average room rate on the secondary market in February was 2.61, with the average price of each room at $43.

The price index also fell by 3.8 points to 185.4. Proposals on the market increased by 0.1 percent. Roughly 7,000 flats were proposed on the market. The dynamics of the purchase and sale transactions grew by 0.87 percent.

The share of new buildings on the secondary market was 61.2 percent.
The most attractive districts were Khatai and Yasamal.

The share of Yasamal, Nizami, Narimanov and Khatai districts in the proposal portfolio was 79.4 percent. The formation of the portfolio is linked with the entry of new buildings on to the market.

Land market

The average price for 100 square meters of land decreased by 0.8 percent from $14,426 to $14,310 in Azerbaijan in February, NGO Property Market Participants said.

The main reason for the price decrease on Baku's land market is the sharp decline in demand , the report said.

The summary table shows the change in prices in the zones of the city:

The price increase was observed mainly in the Garadag district of Baku - by 1.2 percent, Sabunchu - 0.4 percent. The most active districts in the land market were Binagadi and Khatai. The most passive was Narimanov.

The most expensive land was offered in Nasimi for $230,000 per 100 square meters, and the cheapest in Absheron for $350 per 100 square meters.

About 781.6 hectares of land was proposed on the land market in Baku in February. About 78.1 percent fell to empty lots and the rest to new and old residential areas.

The term of land exposition increased by 1.2 percent compared to January 2011.

Commercial facilities

In February, prices for facilities used in commercial purposes in Baku increased by 0.7 percent, rent of commercial buildings - by 0. 6 percent.

The number of purchase-sale deals decreased by 6.7 percent.

Proposals on the market decreased by 3 percent.

T he trend observed o n the market since the beginning of the crisis period (September 2008) affected t he decrease in demand.

The average price of a non-residential facility amounted to $2.9 00 in Baku in January compared to $2,92 1 per square meter in February.

According to the research, prices declined by 2 percent compared to the same period of 2009 and by 0.1 percent - by the previous quarter.

The share of commercial facilities, proposed on the market below the average price ($2,92 1 per hundred sq/m) amounted to 51. 7 percent of the market portfolio.

The significant increase in prices on non-residential facilities was observed in Garadagh district of Baku - 1.8 percent in February and significant reduction - in Sabunchi and Khatai districts - by 2.6 percent.

The summary table shows the change in prices for commercial facilities in the zones of the city:

Building materials

According to the results of monitoring carried out on the building materials market, in February, the prices on building materials have grown by an average of 11.8 percent compared to prices in January.