CONSTRUCTION BOOM

The construction market of Azerbaijan has already passed the peak of the fall in demand as a whole, and the last two years have seen a clear trend towards output growth. Most likely, this will be the dominant trend in the next two decades, given the ambitious urban development and infrastructure plans of the government. This is clearly confirmed by the 18th International Exhibition BakuBuild-2012 launched in mid-October. Held annually by Iteca Caspian, the construction exhibition is among the top three by the level of foreign companies' interest in it, along with oil and telecommunications forums.

Event indicator

The scope and level of the development of the construction industry could be evaluated at the BakuBuild-2012 exhibition, on the sidelines of which two other traditional forums were held. This is the fourth exhibition "Heating, Ventilation, Air Conditioning, Water Supply, Plumbing, Swimming Pools, Technologies for Environmental Protection and Renewable Energy" - Aqua-Term Baku-2012 and the exhibition "Guard, Security and Rescue - CIPS-2012", which was conducted for the fifth time.

Together, all these subjects involved 455 companies from 31 countries, and about a third of them displayed their products in Baku for the first time. By the number of participants and the growing total floor space of the exhibition, the current forum secured a 20-per-cent increase. About 35 per cent of the exhibitors are local companies, most of which have been using the show for several years as an effective platform to promote their products on the markets of the CIS countries.

The significant interest in the construction market of Azerbaijan is also demonstrated by the increasing number of collective stands of foreign countries. This year BakuBuild had seven collective exhibitions: among them were regular exhibitors - national groups from Finland, Germany, Italy, Iran, Spain and Portugal. But the debutant of the forum was the Greek national team, which arrived in Baku with the support of the Chamber of Commerce of Greece NERO. Turkish and Chinese manufacturers of building materials, who reserved the largest areas of the exhibition this year, still retain an interest in the Azerbaijani market.

Moreover, the foreign interest in the construction sector is not limited only to participation in exhibitions and sale of products and services here. "According to the results of the first three quarters of the last year, about 16bn dollars were invested in the economy from all sources. A significant amount of these investments falls to the construction sector, which has gained high growth rates in the past few years again," the head of the International Relations and Information Department of the Azerbaijani State Committee for Urban Planning and Architecture, Cahangir Qocayev, said at the opening of BakuBuild-2012. In general, over the past fifteen years, about 18-20 per cent of direct foreign investment in our economy came from the construction sector.

Not surprisingly, the domestic construction sector, which has about 1,500 companies and over 64,000 employees, has successfully overcome the global economic crisis, which led to a noticeable decline in the sector in 2008-2009, and has steadily maintained its positive development over the last two years. According to the SSC, last year the volume of housing construction in the country reached 1.922 million square metres, which is 7 per cent more than in the previous year. For comparison - last year 370,000 more square metres of housing were commissioned than in the most favourable pre-crisis year 2008. This positive trend was maintained in the current year: in January-August 2012, the construction sector witnessed a 34.9-per-cent growth with regard to the last year. According to the pace of the development of the construction sector, Azerbaijan has overstepped the indicators of the pre-crisis period for the second year. It is also encouraging that three quarters of the whole amount of work fall to the private sector. Considering the structure of construction work, it can be said that almost 73.2 per cent of all investments fell to new construction projects, and these figures clearly show that the domestic construction industry is able to increase output despite negative global trends.

Material issue

Obviously, it is the high rate of construction in Azerbaijan that played a catalytic role in the creation of an extensive manufacturing industry of building materials. It is most graphically confirmed by the development of the fundamental base of the construction sector - cement production. The country's annual demand for this most important building material varies between 4-4.5 million tonnes and will reach 6 million tonnes in the years to come. To meet the growing demand, the country is creating new and upgrading the existing cement plants. In the next two years, Azerbaijan will become the first country in the region to meet all its demand for cement and to start exporting it. By the end of the next year, Azerbaijan will attain total cement self-sufficiency, while the reserve capacity of industrial enterprises makes it possible to export from one to one and a half million tonnes of cement and clinker per year.

No less progress has been made in the production of reinforcement rods and other steel structures widely used in construction.

Optimism about the development of the construction industry in the country is inspired by the activities of leading manufacturers of dry mixes and finishing materials. New enterprises providing the construction sector with plastic pipes of different sections, power cables and complex metal structures have been opened in the Sumqayit Technology Park. A considerable number of companies have started to produce paints, heating and insulating materials.

The list of manufacturers of building materials is annually updated, and this growth is steadily supported by the domestic construction industry, which has proven its resistance to crises and its ability to increase output despite negative global trends.

Big plans

Of course, the stability and growth of Azerbaijan's construction market are largely dependent on large-scale projects being implemented by the government. And judging by the plans of the state, this growth will be maintained further. In particular, many of the participants in this building exhibition were interested in the regional development plan of Greater Baku 2030.

Over the past two years, Azerbaijan has almost completed the development of a master plan for the development of the capital and its suburbs. In the course of the recent 35th meeting of the Intergovernmental Council of the CIS on cooperation in the sphere of construction, the public was presented with the main parameters of the regional scheme of Greater Baku 2030. The implementation of this plan will require extensive reconstruction of urban neighbourhoods, expansion of roads, creation of new recreational areas, for which it is planned to demolish some of the dilapidated housing, and relocation of industrial, administrative, educational and other buildings outside the city.

In coming years, the Azerbaijani capital will have to overcome the negative effects of the construction boom of the 1990's - early 2000's with chaotic construction and numerous violations of the Baku urban plan typical of that era. "Already in the 1970s, due to the practical completion of the building of the Baku amphitheatre, it was necessary to find a concept for the future development of the city outside its established limits. In this regard, in 1987, it was decided to launch the fifth general plan of the capital, which covered the whole territory of the Abseron Peninsula," the head of the State Committee for Urban Planning and Architecture of Azerbaijan, Abbas Alasgarov, said during the session of the Intergovernmental Council of the CIS for construction. According to him, due to objective circumstances, our country was able to return to the development of the new general plan of the capital only in the last three years.

How does the State Committee for Urban Planning and Architecture see the transformed architectural appearance of Greater Baku and the prospect of expanding the urban agglomeration?

Azerbaijan's development over the past 10-12 years has significantly increased the importance of the comprehensive assessment, planning and use of land. These aspects are particularly relevant to the capital with its compact planning where more than 36 per cent of the population of Azerbaijan is concentrated - in particular, if we take into account the assessments of experts who believe that the territory occupied by the unorganized housing estates that emerged in the 1990s is more than 10,000 hectares today. Therefore, the main task of the new general plan is to put the process of urban development on science-based, rational, efficient, coordinated rails to finally overcome spontaneous phenomena in urban land use.

Town planning tasks are primarily focused on the principle of improving the quality of life: to create a comfortable residential environment, improve the environment throughout the territory, raise engineering support to standards adopted by the world and improve modern passenger transport, etc.

To achieve this goal, the planning of the industrial, residential, administrative, recreational, and other areas in Greater Baku will cover the whole of the Abseron Peninsula, including the administrative territory of Sumqayit and Xirdalan and part of the Abseron administrative region with a total area of over 250,000 hectares. The integration of these areas in the single urban development plan of Greater Baku is dictated primarily by significant economic regional development and growth in demographics. In particular, in recent years the growth of migration to the capital and its suburbs has caught up with the natural population growth in the capital. Another remarkable fact is that the area of Greater Baku occupies only 6 per cent of the total territory of the country, but about 85 per cent of the gross product of the state is concentrated here.

It is expected that by 2030, the population growth in the capital will be 745,000, reaching 3.35 million on the whole. Respectively, the housing stock is expected to double - it will reach 64.147 million square metres while 25 square metres of housing will be available per person compared to the current 17.3 square metres.

In addition to the creation of new residential areas, new territories will also be involved to relocate from the capital industrial enterprises which are located in the centre of the Baku amphitheatre and do not meet any environmental or functional requirements. A similar problem is solved by the relocation of the seaport from the Baku Bay, as well as the expected relocation of a number of major institutions to suburban campuses.

Approximately by 2030, some 22,000 hectares of oil-field areas will be rehabilitated, and most of them will be used as forest park zones. It is also planned to landscape no less than 34,000 hectares currently used by industrial entities or abandoned areas: parks and gardens will appear there, and in the process of improving those areas, the road network will increase by hundreds of kilometres. It is also planned to reconstruct chaotic low-rise buildings and standard five-storey houses built in the 1960's and 1970's. The amount of polluted lakes will decline dramatically, and the process of urban development may involve some of the unused agricultural lands of the Abseron Peninsula.

High pace

Although the approval and launch of the regional development plan of Greater Baku is a matter of the near future, many of the projects envisaged by this document have already been successfully implemented in recent years. For example, since 2006, Baku has implemented ambitious projects for the reconstruction of the road network: in a short period of time, hundreds of kilometres of new highways were built and existing roads were reconstructed. Dozens of highway bridges, tunnels and pedestrian crossings at major road junctions were built, and their number is much higher than during the entire Soviet period. Over the past few years, grandiose changes affected one of the main attractions of the capital - the Seafront Boulevard. Its length has increased by more than twice - to 6.5 km, and in the future, with the involvement of the northeast coast of the Baku Bay towards the village of Zig, the total length of the boulevard will exceed 11-12 kilometres.

These road and recreational projects and, of course, major residential and administration construction work in the capital became one of the most important factors contributing to the dynamic development of domestic construction companies and plants manufacturing building materials, as well as the growing interest of foreign companies in Azerbaijan.