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A guide to Azerbaijan's construction industry

Azerbaijan's construction market has enjoyed rapid growth in recent years, and this looks set to continue. Here, we list all the key statistics and other information that prospective investors will need to know about the Central Asian country.

Key statistics

 - Population: 9.417 million (2013).
 - Annual population growth rate: 1.3 per cent (2013).
 - Percentage of population of a working age: 72.2 per cent (2013).
 - GDP per capita: $7,811.60 (2013).
 - Total GDP: $73.6 billion (2013).
 - Estimated GDP growth: 5.8 per cent (2013).
 - Unemployment: 6.0 per cent (2013).
 - Ease of doing business: 80th in the world (up eight places from 2014).
 - Ease of getting credit: 104th in the world.
 - Ease of starting a business: 12th in the world.
 - Government: Presidential republic.
 - DHL Global Connectedness Index 2014 ranking: 82nd in the world.
 - Interest rate: 3.5 per cent.
 - Foreign Direct Investment (FDI) into Azerbaijan: $8 billion in 2014 (up from $6.3 billion in 2013).
 - Of this, $6.3 billion came from the oil sector, up from $5.2 billion in 2013.
 - Starting a business in Azerbaijan takes an average of just five days, compared to the world average of 30.6 days. The average for Europe and Central Asia is 12.1 days.

Construction facts

 - Economic impact of construction industry: Generates 11.7 per cent of GDP.
 - Volume of construction work: $11.1 billion (2013).
 - Construction industry growth: 9.1 per cent (2014).
 - Size of construction workforce: 101,400 (2013).
 - Number of construction permits issued: 1,667 (2013).
 - In 2013, new construction accounted for 66.2 per cent of all implemented construction work in Azerbaijan, followed by capital repair (17.6 per cent), current repair (2.9 per cent), and other (13.3 per cent).
 - Private companies carried out more than four-fifths of all construction work in 2013.

Major projects

1. Azerbaijan Tower
When completed, this megatall skyscraper will stand at about 1,051 m tall - 200 m higher than the Burj Khalifa in Dubai, and 50 m taller than Saudi Arabia's Kingdom Tower, making it the world's tallest building. 

The $2 billion tower, which is the brainchild of Avesta Group, will have 189 storeys and is due to be finished in 2018-19. Avesta had originally intended to build a 560 m tower, but significantly upscaled its plans.

The Azerbaijan Tower is designed to form the centrepoint of the ambitious Khazar Islands development, a network of artificial islands located 16 miles south of Baku.

2. Khazar Islands
This $100 billion city, also known as Caspian Islands, will be situated on 41 manmade islands spread over 3,000 hectares of the Caspian Sea.

Again led by Avesta Group, Khazar Islands is a mammoth development. When finished between 2020 and 2025, it will boast enough residential space for one million people, as well as 50 hospitals and daycare centres, 150 schools, several shopping centres, parks and cultural spaces, university campuses, and even a racing circuit capable of staging Formula 1 events. Perhaps the grandest single undertaking will be the aforementioned Azerbaijan Tower.

Transport between the islands to the mainland will be possible thanks to 150 bridges and a large municipal airport.

Ibrahim Ibrahimov, president of Avesta Group, said the finished development will be like a "new Venice".

3. Baku Street Circuit
The new circuit is set to host Formula 1's European Grand Prix from 2016. Designed by German engineer and circuit architect Hermann Tilke, it will take in some of the most impressive and historic parts of Baku, from Azadliq Square and Government House to Maiden Tower and the Old City.

Complementing the new circuit will be a grandstand built at the finish line, along with a sizeable paddock area for the teams and drivers, and visitor facilities that are intended to rival the best in F1.

4. Baku White City
The huge White City project involves the redevelopment of Baku's Black City, which was established in the eastern part of the capital in the late 19th century as the hub of the local oil industry. With the majority of Azerbaijan's oil now produced from offshore wells, Black City had become a run-down area characterised by abandoned buildings and oil wells. 

Under the major renovation plans, 221 hectares of former industrial land - larger than the principality of Monaco - will be transformed through the development of ten neighbouring districts, boasting 18,000 commercial and residential units. 

Landmark features will include an expansion of Black City's existing Fountain Square, the construction of a 65 m high observation wheel, a new metro station, and the largest retail and entertainment centre in the region.

Business culture

Azerbaijan is a very hierarchical society, meaning culture, traditions, family and religious beliefs often take precedent over official laws. It is not unusual for the government to turn to the 'agh sakkal' - or prominent and respected people - for help with resolving troubling issues.

As with most Central Asian cultures, Azeris favour warm and friendly greetings. Men typically greet each other with a handshake, a kiss on the cheek and the word 'salaam', while women hug and kiss each other once on the left cheek. Azeri women generally do not shake hands with one another, but often will with a foreigner. Men should always wait to see if a woman will shake their hand, and should only shake it lightly. Furthermore, it is customary for younger people to initiate greetings with their elders.

Before diving into business talk, a few moments should be spent asking about family, health and other such matters.

In situations where you do not know the other person well, refer to them by their first name, followed by an appropriate title - 'hanum' for women, and 'bey' for men.

Direct communication is generally seen as a positive, but it is also important to be careful. Diplomacy and sensitivity should be employed when conveying information so as to avoid anyone losing face, particularly in the case of new, formal or sensitive business relationships.

While no formal ritual exists for exchanging business cards, they should be given and received with the right hand.

International investment

State Customs Committee figures show that foreign direct investment in Azerbaijan grew by 17.1 per cent year on year in 2014.

The UK is the biggest foreign investor in Azerbaijan's economy, contributing $1.5 billion last year, followed by Norway ($860 million); Turkey ($398 million); the US ($363 million); and France ($315 million).

Among international organisations, major investments came from the likes of the World Bank ($115 million); the Asian Development Bank ($84 million); and the European Bank for Reconstruction and Development ($8.5 million).

Interior design trends 2015

Dark woods, tiled floors - often in mosaic-style layouts - and traditional patterned rugs are common aspects of Azeri interior design. Contemporary office design tends to take account of these factors, while also bringing in more modern elements such as cream furniture, offset against dark wooden walls and tables.

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