Everything you need to know about construction in Azerbaijan
Azerbaijan has experienced explosive growth in its construction sector over the past decade. Accounting for 12% of Azerbaijan’s $169.4 billion economy, construction has a built itself a major role in the economic structure of the nation.
With foreign investment totalling $220 billion over the past 20 years, Azerbaijan is already an attractive environment for international businesses. Construction is another avenue for those brands to explore.
WorldBuild365 takes an in-depth look into the trends, projects and building activity driving Azerbaijan’s construction sector.
Construction in Azerbaijan: an overview
While growth performed above and beyond expectation over the past years, 2016 has been subject to a decline in construction activity. 2015 ended with a 13.4% contraction in building work. However, the sector is predicted by AECOM to be reinvigorated by a splash of new infrastructure projects.
Sergey Aleshchenko via Flickr
The construction industry has grown fast in recent years, covering all major sub sectors. 2015’s numerous residential construction projects saw 1.9 million square metres of new housing put into use. Elsewhere, the construction sector is propped up by a wealth of infrastructure, commercial and retail projects taking place nationwide.
Projects completed in recent years are close to Azerbaijan’s national heart. As symbols of the nation’s long and storied heritage, the Flame Towers make the perfect example. Completed in 2012, at a cost of $350 million, the triple skyscrapers pierce the capital city Baku’s skies with heights reaching a dramatic 182 metres at Flame Tower One. This particular development is evocative of a new Azerbaijan: sleek, modern and adventurous.
Construction materials: what does Azerbaijan import?
Import volumes of building materials to Azerbaijan are high. 2015’s figures from the State Statistical Committee of the Republic of Azerbaijan showed the following levels of construction related products came into the country:
• $1.8 billion of metals including iron and steel for building work
• $259 million worth of plastics & rubbers
• $230 million worth of wood
• $213 million worth of glass and stone products
A free trade zone is set to be in effect at Baku International Sea Trade Port from January 2017 onwards, making shipping construction related materials and goods to Azerbaijan a cheaper, easier prospect.
A shopping mall under construction in Baku.
A tower under construction in Baku.
In terms of local manufacture, Azerbaijan produced $555 million worth of construction material in 2015. By 2019, this figure is expected to exceed $1 billion. Cement forms the crux of this manufacturing activity with 1.62 million tons being produced in 2015 alone.
As well as export opportunities, international brands are also claiming a stake in local building material production in Azerbaijan. Swiss company SIKA has moved into the Sumgayit Chemical Industrial Park complex 35.4 kilometres from Baku. Here, SIKA is currently adding the final touches to a brand new concrete mixers plant. The plant, where predicted capacity is to hit 5,000 units annually, is expected to begin operations in 2017.
Azerbaijan’s major construction projects
Now we know the state of the market, and the materials made locally or imported, it is time to see how Azerbaijan is putting its construction know how into practice. Beyond infrastructure and residential projects, which are an ongoing concern, it seems the focus for Azerbaijan’s construction sector currently lies on the extravagant, the luxurious and the expensive.
Khazar Islands is Azerbaijan’s most ambitious project. Spawned from the creative brains at the Avesta Group, Khazar Islands is a development cover 3,000 hectares – not on land, but as the name suggests, out at sea. 41 manmade islands are to be constructed under this project.
Costs? A projected $100 billion. If that budget seems huge, that is because it has to be. Avesta hopes to have room for a million people on the artificial island chain. Facilities will include 50 hospitals, 150 bridges linking the islands to the mainland, and a Formula One-standard race track. Oh, and Azerbaijan Tower.
Azerbaijan Tower is worthy of deeper examination. As Khazar Island’s finishing touch, if a $2 billion skyscraper can be called a “touch”, the tower will soar over a kilometre high once completed. In fact, it will dwarf Dubai’s Burj Khalifa and Saudi Arabia’s Kingdom Tower to become the world’s tallest structure at 1,050 metres.
Construction of both the Khazar Islands and Azerbaijan Tower is expected to finish by 2025 at the earliest. Building work is tentatively underway at the site, located around 25 kilometres from Baku. Some estimates, which take into account the gargantuan scope of such a development, suggest it will not be until after 2030 that the project reaches its conclusion.
Whatever happens to the Khazar Islands, it shows the ambitions held within Azerbaijan’s construction industry. Building in Azerbaijan is proving to be an essential component of the nation’s drive to diversify its economy away from minerals and resource extraction, and there are plenty of opportunities for international suppliers.
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