Construction in Azerbaijan - Key Trends and Opportunities to 2025 (Q3 2021)

Azerbaijan’s construction industry contracted by 9.7% in real terms in 2020, owing to the outbreak of Coronavirus (COVID-19), a collapse in oil prices and the economic uncertainty caused by the 44-day battle between Armenia and Azerbaijan, which started in late September 2020 over the disputed region of Nagorno-Karabakh. Prior to the COVID-19 outbreak, the industry was showing early signs of recovery, with quarterly value-add data registering growth of 4.5% and 2.4% in Q3 and Q4 of 2019. However, the COVID-19 outbreak and the downturn in the global economy exacerbated the weakness in Azerbaijan’s construction industry.

Following years of contraction, the industry is expected to recover in 2021, supported by higher oil prices, the continued global recovery and the restoration and reconstruction work in the liberated territories. According to the State Statistical Committee of the Republic of Azerbaijan, the country’s value add grew by 4.8% year on year (YoY) in the first quarter of 2021, reflecting an improvement from the declines of 7.1% and 8.2% in Q4 and Q3 2020, respectively. This improvement is due to the accelerated ongoing construction activities following the signing of a peace deal between Armenia, Azerbaijan and Russia, thus paving way for the economy to recover gradually. The government has taken up several projects, including the construction of “Victory Road”, the airport and other projects in the newly liberated areas, which will drive growth in the short term. According to the Asian Development Bank (ADB), the Azerbaijanian economy is expected to grow by 1.9% this year and 2.5% next year, while the European Bank for Reconstruction and Development (EBRD) projects growth of 2% this year, with rising oil demand supported by an expected gradual increase of oil quotas in the coming months.

The publisher expects construction activity to rebound and grow by 5.2% this year, and then stabilize to register an annual average growth of 4.7% between 2022-2025, supported by investments on overall infrastructure to rebuild the recently-liberated regions, following the Armenia-Azerbaijan disputes. As part of the 2021 Budget, the government allocated AZN2.2 billion (US$1.3 billion) towards the restoration and reconstruction of liberated territories. Furthermore, the industry will be supported by investments in the oil and gas and renewable energy sectors. The government expects to invest AZN24.7 billion (US$14.5 billion) in the oil and gas sector between 2021-2024. In addition, the government aims to increase the total share of renewable energy in the electricity mix to 30% over the next 10 years. The government’s plan to strengthen its non-oil sectors through an increase in Foreign Direct Investment (FDI) will also attract investments in the infrastructure and industrial sectors in the short and medium term. The government plans to increase the share of non-oil FDI from 2.6% of GDP in 2017 to 4% by 2025. Furthermore, in May 2021, the World Bank approved a loan of AZN110.5 million (US$65 million) to the Republic of Azerbaijan to finance the Regional Connectivity and Development Project.

the publisher's Construction in Azerbaijan - Country Briefing (H2 2021) report provides detailed market analysis, information and insights into Azerbaijan’s construction industry, including:

• Azerbaijan’s construction industry's growth prospects by market, project type and construction activity
• Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in Azerbaijan’s construction industry
• Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Azerbaijan. It provides:

• Historical (2016-2020) and forecast (2021-2025) valuations of the construction industry in Azerbaijan, featuring details of key growth drivers.
• Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
• Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
• Listings of major projects, in addition to details of leading contractors and consultants

Reasons to Buy

• Identify and evaluate market opportunities using the publisher's standardized valuation and forecasting methodologies.
• Assess market growth potential at a micro-level with over 600 time-series data forecasts.
• Understand the latest industry and market trends.
• Formulate and validate strategy using the publisher's critical and actionable insight.
• Assess business risks, including cost, regulatory and competitive pressures.
• Evaluate competitive risk and success factors.