OREANDA-NEWS. October 27, 2009. The Baku Realtors Association (BRA) has reported of certain stabilization at the real estate market of Azerbaijan.

Nusret Ibrahimov, one of the BRA founders (a representative of consulting and assessment company MBA Ltd.), says that certain stabilization is observed at the market of cheap housing.

“Simultaneously decline of 0.7-0.8% is observed at the market f expensive housing. The market can stabilize in mid-2010 by summer,” he said.

Activation of cheap housing market is linked with resumption of disbursal of mortgage loans.

According to BRA, 4-5% year-on-year growth in the sector is possible by the end of the year.

In the 1st quarter 2009 Baku real estate market turnover fell by 40% compared to the 2008 same term.

Nevertheless, despite 30% fall in prices for building materials, profitability of construction sector is ongoing dropping. Today it makes only 13%.

Liquidity of the domestic real estate market has also decreased - from 85% to 62-63%.

Simultaneously the exposition period has increased sharply. There is an example when it makes 19 months, while in total exposition term (for land plots) equals a year.

Investors are just not interested to invest in housing construction bringing no expected income. Construction companies themselves are not able to construct new buildings at the expense of re-investment because of fall in prices. So, if in 2006-2007 it was commissioned 25-30 buildings a month, now the figure makes no more than 1 or 2 buildings.

The situation has resulted in construction sector restructuring.

Construction companies have refocused from housing construction onto commercial real estate (hotels, infrastructure etc.). As a result, housing construction share reduced to 20% of overall construction volume.