All Roads Lead to…

All Roads Lead to…

All Roads Lead to…

RESIDENTIAL

A number of factors are likely to affect the Kazakhstani residential market in the future, but the most prevalent is the high presence of low-income earners and their inability to afford mortgages. Over the medium term, this should increase demand for housing slightly as more low-income earners look to get onto the property ladder. CBRE also predicts that theWorld Expo 2017, held in Astana, will affect house prices and again likely push them up, at least in the capital.

On the other hand, some of the most expensive housing in the Astana is located in projects such as Green Village, Rixos Khan Shatyr Residence, Dolphin, Highvil, Nurasaya, and the Europe Palace. According to Scot Holland, the average price per sqm for affordable housing in 3Q2013 was $1,750, while medium housing came in at $2,150, and top-class housing cost an average of $2,650 per sqm. In terms of rentals, the average monthly rental price was $1,100, while for a one-bedroom it was $600, two-bedroom $750, three-bedroom $1,000, and for a four-bedroom house and above it was an average of $2,000 per month. For luxury housing, a one-bedroom house was going at $2,000 a month, a two-bedroom house for $3,000, and a three-bedroom house had an average price of $5,000 per month.

OFFICE

The relocation of the capital city has been one of the major driving forces behind the building of commercial districts in Astana. The demand for Grade-A and Grade-B office space is growing as occupancy rates begin to hit 100% in modern Grade-A commercial complexes. There are many multinational companies setting up their offices in Astana; however, there is a growing tendency to relocate to Almaty as demand is outstripping supply. There are three projects about to come online in Astana, which will bring close to 50,000 sqm onto the market. The Q project will bring with it 22,700 sqm of Grade-A office space, while Renko has a total area of 12,000 sqm, and Marriott a further 11,300 sqm. The recently completed Moscow Park in Astana is already fully occupied. Due to the relative youth of the commercial real estate market in Astana—there was only 30,000 sqm of office space in the entire city in 2005—the government has backed a number of mixed-use developments that have change the skyline of the city. The continued success of the office real estate sector will be largely dependent how fast the country’s businesses and industries can recover from the crisis of 2009, which is taking longer than some expected.

RETAIL

The retail sector in Kazakhstan is one that is recovering much faster than both the residential and office sectors of the real estate market. In Astana alone, retail turnover between January and August 2013 reached nearly $2.1 billion, a 25.3% increase on the same period the year before. The total gross leasable area (GLA) in Astana in 3Q2013 was 346,100 sqm, while in Almaty it was slightly higher at 590,000 sqm. By the end of 2014, Almaty is expected to have over 650,000 sqm of GLA. There are 20 modern shopping centers in Almaty, with a further 10 under construction. The average rent has remained stable since 2012 at $60-$90 per sqm for boutiques of 60-100 sqm, $50-$60 for medium-sized stores of 500-1,500 sqm, and $10-$30 for large stores of 1,500-5,000 sqm and above. The highest rents are seen in the Mega Alma-Ata and Ramstore Samal shopping centers in Almaty. Outside of the shopping centers on the high street, a 130-sqm store had an average rent of $7 per sqm per month, and the overall average rental price was $27 per sqm. The highest rental prices for high street shops are still around the Arbat, in addition to Zhibek Zholy and Gogol districts.

The overall real estate market is looking promising. The government has launched a number of initiatives aimed at promoting the country and its cities, including the Trade Development Program and the Affordable Housing 2020 program, which are both drawing in local and foreign investors.