The Eurasian Economic Commission published the indicators of
\nthe volume of construction work carried out in the EAEU countries in
\nJanuary–May 2023. The average rate of growth in construction work within the
\nEAEU was 9.2%. In the given period of observation, the volume of construction
\nwork in Armenia increased by 47.3%, compared to the previous year.
<\/p><\/p>\n
Economist Suren Parsyan has some reservations about the
\nmentioned indicators.
<\/p><\/p>\n
“According to official statistics, the construction
\nsector of Armenia showed a 16.7% increase in volumes in January–May 2023. The
\nEAEU indicators are overly good, and I have no idea how they got
\nit,” Parsyan said.
<\/p><\/p>\n
According to him, the growth in construction work in Armenia
\nwas mainly due to private companies.
<\/p><\/p>\n
“In other words, large construction projects,
\nparticularly asphalting, construction of water pipes, lighting system
\ninstallation, etc., were carried out with state subsidy. We experienced growth
\nin the volumes of construction work in these two directions, namely
\nstate-funded projects and private companies, operating in the real estate
\nsector,” Parsyan noted.
<\/p><\/p>\n
The economist notes that in Yerevan, permission is given to
\nbuild about 320 apartment buildings. Thus, plans are afoot to build 55,000
\napartments.
<\/p><\/p>\n
“This is an unprecedentedly high index for Yerevan, which is
\nfraught with rather serious problems. In other words, the market demand for
\napartments will fall, but at the moment so many apartments are still being
\nbuilt,” Parsyan said.
<\/p><\/p>\n
Another important fact is that levels of foreign investment
\nin the Armenian construction sector continue to fall.
<\/p><\/p>\n
The economist notes that in 2023, the levels of foreign
\ninvestment in the Armenian construction sector fell by 60% compared to 2022.
\nThis is because the construction sector in Armenia has become risky, even for
\nforeign investors.
<\/p><\/p>\n
The Armenian construction sector is mainly financed by the
\nbanking system, as far as the private sector is concerned. Banks give loans both
\nto construction companies and to buyers. Thus, the growth in volumes of
\nconstruction work and the increase in real estate prices are in the interests
\nof the banking system. This economic bubble that is being blown, especially in
\nthe past two years, may pop, thus leading to acute problems for our
\neconomy,” Parsyan said.
<\/p><\/p>\n
It is noteworthy that last year, real estate prices largely
\nwent up. However, since March 2023, the volume of apartment sales has decreased
\nby 10%. According to the economist, if the situation remains the same, we will
\nexperience a sharp drop in prices in the real estate market. This, in turn, may
\ncause rather serious issues and pose major financial risks to construction
\ncompanies.
<\/p><\/p>\n
“In other words, many construction companies may go
\nbankrupt, and this can have a domino effect on the entire real estate market.
\nAlthough in the last two years we have had a double-digit growth rate, this
\ntype of growth is fraught with problems. If we achieved this growth in the
\nconstruction sector due to the construction of large factories or due to
\ninfrastructural projects like the construction of tunnels, reservoirs or water
\npipes, we could say that this is the construction work that will promote
\neconomic growth. We are not going to achieve economic growth in the future by
\nmerely building apartments. This is short-term growth in the construction
\nsector,” the economist said.
<\/p><\/p>\n
<\/p><\/p>\n
\n
\n
<\/p><\/p>\n
\n
\n
<\/p><\/p>\n\n
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