Azerbaijan Sustainable Construction

Sector outlook

Boosted by oil revenues, construction is a very dynamic sector in Azerbaijan. On the one hand, the increasing purchasing power drives demand for better living conditions and quality housing. On the other hand, the structural economic reforms undertaken in recent years stimulate construction in agricultural, transport and industrial sectors.

The State monopoly ended in 1997 and private persons may now engage in construction operations. However, foreign entities and individuals are not allowed to own land and may launch construction projects only with Azerbaijani partners.

Even though construction projects have to meet certain standards, very few can already be considered as environmentally-friendly. Thus, there is great potential to develop this segment.

Strategic direction/ Specific schemes and incentives

The Azerbaijani government launched several initiatives and mega-projects to encourage sustainable development but there is still no comprehensive strategy for sustainable construction:

  • Action Plan on Improvement of Environmental Situation implemented from 2006 to 2010;
  • 2010 declared the “Year of the Environment” by President Ilham Aliyev;
  • Tamiz Shahar Clean City pilot project funded by the government to improve the ecological situation of the city, through solid waste management especially;
  • Zira Island project to be developed as a sustainably-built resort on a 1 million sqm island in the Caspian Sea, with wind, solar and wave energy.

In February 2012, the Energy Saving Initiative in the Building sector (ESIB) was launched in Azerbaijan as part of the EU-funded Inogate project.


Business opportunities

Promising sub-sectors:

  • Introduction of resource-efficient technologies for insulation, heating, cooling, water supply, etc.;
  • Provision of state-of-the-art architectural and engineering services for public and private mega-projects;
  • Transfer of designs and methods following green building standards to local firms;
  • Production and/ or distribution of high quality building materials;
  • Development of smart complexes, including housing, offices, shopping centres, etc.;
  • Development of affordable housing and of villas and interior design for higher-income households;

Example of investment opportunity:

  • Baku White City: restoration of the 221 ha Black City industrial area (Baku Bay) and rational development of residential, office and retail space, as well as tourist, educational and health facilities in joint-venture with Azerbaijan Development Company (ADC).


Some success stories

BIG (Denmark), a group of over 80 architects, designers and builders, was selected by local Avrositi Holding as master planner of the Zira Island project. The plan was presented in 2009 as Central Asia’s first Carbon Neutral Master Plan. The 1 million sqm island in the Caspian Sea will be developed into a sustainably built resort based on the seven peaks of Azerbaijan and its mountainous ecosystems.

Knauf (Germany) is a multinational producer of building materials based on gypsum, which is regarded as an environment-friendly material. The group has a representative office in Baku and established a joint-venture with local Gilan Group in 2006. Gilan & Knauf Plasterboard produces water- and flame-retardant slabs for the local market. The factory, located in the Goranboy region, is equipped with next-generation technology and supplied with locally produced polyethylene bags, timber and glue.


This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of EUROCHAMBRES and can in no way be taken to reflect the views of the European Union.

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