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Residential construction grows in Azerbaijan

The Azeri construction industry is in a positive place at the moment, as an increase in residential building is boosting its growth. The nation's demographics point to a population that is becoming larger, wealthier, and more willing to buy a house, which is contributing to this rise in the commission of new homes.

The nation's population has been growing by an average rate of 1.5 per cent (from 2009 to 2013), to total almost 9.7 million in 2014. This increasing populace is becoming more and more urban, with 54.4 per cent of the country living in cities in 2014, and the current rate of urbanisation sits at 1.54 per cent.

This populace of city-dwellers - who are becoming more and more wealthy thanks to growing profits from Azerbaijan's oil and gas industry - are more and more likely to want to purchase a new home, and the Azeri construction market has benefited as a result.


Growth in housing commissioning

The amount of housing projects commissioned in Azerbaijan increased significantly in April, both compared to the previous month and to the same period of 2014. In April 2015, around 175,000 sqm of housing was commissioned in Azerbaijan, compared to 151,663 sqm in March. This is an increase of 15.4 per cent.

In April 2014, 127,300 sqm of housing was commissioned, equating to a year-on-year growth of 37 per cent. In 2014, a total of 1.978 million sqm of housing was commissioned - an average of roughly 165,000 sqm per month - and so far 2015 is on track to be an even more productive year for residential construction.


A strong mortgage fund

In part, the growth of Azeri housing is due to a strong central mortgage fund allowing citizens to get the loans they need to make a first-time purchase. The Azerbaijan Mortgage Fund (AMF) - which is funded by the Central Bank of Azerbaijan (CBA) - has just been assessed by international credit firm Fitch Ratings, and has had its 'BBB-' rating affirmed.

Fitch sees the state of the AMF as stable, as the CBA has recently purchased 60 per cent of the fund's bonds. Fitch said that this "shows the willingness of the Central Bank to support the fund, if necessary", adding: "Fitch expects that the fund will continue to receive support from the Central Bank."


Government support for affordable housing

This fits in well with the Azeri government's policy of providing its citizens with affordable housing. Article 43 of the nation's constitution lays this out specifically, stating that the nation will "assist in the construction of living premises and take special measures for realisation of the right to a home".

With demand for housing high, it is clear that the government is taking steps to provide housing by commissioning more and more residential construction. This is beneficial to the building industry, as well as to suppliers of housing materials such as doors, windows and bathroom fixtures.

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