Yulia Prokhorova: ‘A lot of new companies are looking for a niche in Central Asia’

An expert in the real estate market about new markets for Russian businesses in Kazakhstan, Uzbekistan and Kyrgyzstan

An exit of Western companies stimulated Russian businesses to look for new markets, and in this respect, Russian companies are recommended paying attention Central Asian countries. Entrepreneurs of this region are ready to occupy the vacant niche. Realnoe Vremya’s columnist, a real estate expert Yulia Prokhorova went to Kazakhstan, Uzbekistan and Kyrgyzstan like many others to look for a business: land parcels for housing development for a Tatarstan developer and not only. An column for our newspaper, Perfect RED’s executive partner talks about growing markets of the three countries.


We are yet to know the whole scope of the changes that happened in the world economy. Nevertheless, the first shock is over, and businesses started to adapt to the changing conditions of the market. New logistic chains, new growth sources, new challenges.

And again, a boost of personal efficiency and business efficiency are the only way to not only success but also stay afloat.

The speed of decision-making gains a decisive meaning. Like it was said Lewis Carroll’s Alice in Wonderland: “We must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.”

Construction and the real estate market in Russia lowered the development pace. For developers and professionals of the market in this sphere, we see at least two strategies: to expect the demand to return to the previous figures or expand the territory of the efforts that are put.

Like many others, Perfect RED chose the second strategy and we went to the country of the “new Asian dragon.” We headed for Uzbekistan to look for a business: land parcels for housing development for a Tatarstan development; tenants — textile companies searching for new outlets; areas to locate sewing factories...

In this digest, we want to talk about growing markets. Real estate markets where real estate goes up in price demand is stable and a lot of new companies are looking for a niche.

We analysed key socio-economic indicators and did a desk study of residential and commercial property markets in Central Asian countries. Our short list has three states: Kazakhstan, Uzbekistan and Kyrgyzstan.

The markets of these countries seem to be more promising to us, the political situation is more or less stable. Housing per capita in these countries isn’t high (more below), moreover, the population’s incomes are rising, which altogether provides a steady demand for housing, promising a good attendance rate of shopping malls and development of a business, which requires offices. We are just starting to examine the new markets, but the stable growth of commodity turnovers between the countries inspires us optimism. Although most local production companies don’t have operations infrastructure yet that is necessary to run a commercial activity and enter new markets, the risen demand will favour its further formation.

Today we are working on scanning Tashkent’s real estate market. Only one fact that three foreign developers from China, Korea and Turkey have construction projects in the city means a lot. We expect the next rise in demand for housing in Tashkent soon because of the start of the first mortgage programmes for housing under construction.

There will be two property tours for Uzbek companies to the Republic of Tatarstan. This time, Perfect RED will be the host and show chain retailers from Uzbekistan the best shopping and leisure malls. The second tour will be dedicated to the examination of industrial parks — developers from Uzbekistan formulated such a request.

Comparing per capita housing

Housing per capita is an important indicator reflecting the population’s living standard and the country’s economic development. The total area of the housing stock is divided by the population, so we get the amount of square metres per person in the country.

According to the UN, a person needs at least 30 square metres to live in. At this moment, this indicator is lower in the analysed countries. The levels are significantly higher than the average in European countries and in the US and Canada. The authorities of Kazakhstan, Uzbekistan and Kyrgyzstan try to improve the figure in the next years, state programmes, mortgage support, tax and economic reforms are aimed at it. More investors are attracted, including foreign ones.

New markets: Kazakhstan

Kazakhstan (Kazakh: Qazaqstan; officially the Republic of Kazakhstan) is a country located in the centre of Eurasia, borders five countries: Russia to the north and west, Turkmenistan, Uzbekistan and Kyrgyzstan to the south, China to the east. Kazakhstan is the world’s largest landlocked country that doesn’t have access to the world ocean.

The official language is Kazakh and Kazakh, Russian are co-official languages. The currency is Kazakh tenge.

Kazakhstan is a member of the state of the United Nations, the World Trade Organization, the Organization of Turkic States, the Commonwealth of Independent States, the Shanghai Cooperation Organisation, the Eurasian Economic Union, the Collective Security Treaty Organization, the Organization for Security and Cooperation in Europe, the Organization of Islamic Cooperation and the International Organization of Turkic Culture.

The hydrocarbon industry prevails in the economy, while the population is mainly employed in the services sector. According to the World Bank’s data, which was made public in 2021, Kazakhstan ranks tenth in the world non-renewable natural capital (oil, gas, metals, minerals) in the country’s total wealth, about 27%. Government measures are taken to diversify the economy. Global Competitiveness Report 2020 reads that the country is 55th in the world in national competitiveness (https://www.weforum.org/).

According to the official statistics (https://stat.gov.kz/), GDP in 2021 was 81,269,230,5 million tenge ($177,444 million) surpassing last year’s number by 4%.

Kazakhstan can be notionally divided into five economic regions. Grain farming, iron ore and coal production, mechanical engineering, the production of oil products and ferrous alloys, power engineering are developed in the north. Non-ferrous metallurgy, power engineering, mechanical engineering and forestry dominate in Eastern Kazakhstan.

Western Kazakhstan is the biggest oil and gas producing regions not only in Kazakhstan but also in CIS countries. Black and non-ferrous metallurgy, mechanical engineering, animal husbandry are key economic sectors of Central Kazakhstan. Kazakhstan produces cotton, rice, wool, grain, fruit, vegetables, grape; non-ferrous metallurgy, equipment engineering, the light and food industry, fishing industry and forestry are developed in South Kazakhstan.

Mineral exports allow the country to have a good position in the world’s economy rating with gross domestic product and be one of the best among CIS countries.

Kazakhstan’s financial system is recognised one of the most progressive, and leading international experts confirm this. Kazakhstan was the first CIS country to create a national fund to provide stable socio-economic development, reduce the dependence on unpleasant external factors.

In 2021, gross inflow of direct foreign investments to Kazakhstan totalled $23,7 billion, which is 37,7% more than in 2020 (https://invest.gov.kz/). The Netherlands, USA, Switzerland, Russia and China are the top 5 countries with the biggest investment to the economy of Kazakhstan. KAZAKH INVEST National Company JSC deals with the creation of a favourable investment environment (https://invest.gov.kz/).

According to an investment attractiveness research by Foreign Direct Investment, which is annually done by World Bank Group, Kazakhstan is 134th in the world (https://www.worldbank.org/).

Alma-Ata. Analysis of key socio-economic indicators

Alma-Ata, or Almaty (Almaty in Kazakh) is the largest city of the Republic of Kazakhstan, Kazakhstan’s former capital (until 1997).

The city’s population in 2021 was 1,977 258 people according to the official statistics (https://stat.gov.kz/).

The territory of the city is equal to 682 km².

The unemployment rate in Kazakhstan is low enough — 4,9% as of 2022. Most population work in such economic spheres as commerce (16,7%), agriculture (13,0%), education (12,85), the industry (12,3%). The unemployment rate in Alma-Ata is a big higher than the average across the country — 5,1%.

The salary in Alma-Ata is one of the leading in the country. In 2021, the average monthly salary was 307,265 tenge, which is some 55,308 rubles (as of April 2022 when the rate of the Kazakh tenge against the Russian ruble was 1 to 0,18).

Analysis of housing development

The total area of the Kazakhstani housing stock is 373 million square metres. Moreover, most than a half of housing is concentrated in cities. For instance, about 40% of urban real estate is in three big cities — Nur-Sultan, Alma-Ata and Shymkent.

The statistics on housing per capital confirms the lack of housing. According to the UN international standard, the number must be at least 30 square metres per person. However, in Kazakhstan, it is at 23,2 square metres. To make sure this number reaches the UN average, the republic needs to build another 180-200 million square metres of housing.

At the same time, the residential property market of Alma-Ata grew last year — this refers both to demand and price. New housing is built primarily on the territories annexed to the city, which favours the development of a New Alma-Ata.

The number of residential property sale and purchase agreements in January 2022 increased by 9,5% compared to the figure as of January 2021.

Experts think that a cumulative effect of several factors such as guarantees of the Kazakhstan Housing Company, state mortgage programmes, developers’ programmes.

Analysis of prices. Housing construction

According to the National Statistics Bureau (https://stat.gov.kz/), a study of Kursiv (https://kz.kursiv.media/en/), the average price in March 2022. The dollar rate in March 2022 was 458 tenge.

In experts’ opinion, there is a deficit of housing in the market, which has a considerable impact on pricing. This especially refers to new builds. This makes clients to refocus on the second-hand market where owners artificially raise the price too high.

However, demand stays high. Demand in the new housing market is backed by a 7-20-25 social programme, which provides new opportunities to improve living conditions for every Kazakhstan citizen with affordable loan terms. Last year’s buzz in the market led to a situation in which many new builds were purchased as early as at the stage of construction.

Demand in the second-hand housing market is also high. It is supported by the programme Otbasy Bank. It is enough to accumulate 50% of the housing cost or deposit it to an account, including by using pension surpluses (“pension surpluses” is a sum of money above the sufficiency threshold that will allow providing the minimum pension for every age considering future regular transfers of 10% of income).

Alma-Ata is divided into the upper part, which is the closest to the mountains, and the lower part. The realty cost in the upper part is higher because the business centre of the city is located there, the air is certainly cleaner thanks to the close situation to the mountains, and the infrastructure is better.

Bostandyq, Auezov and Almaly districts are the most popular ones — they are the most claimed by users when looking for housing.

Bostandyq District is the cleanest and comfortable, colleges and universities of the Republic of Kazakhstan are placed here. Auezov District is the centre of cultural life. Here, there is a variety of stores, markets, shopping malls, an academy theatre, international bus stations, convenient transport interchanges.

Almaly District is a calm district with developed infrastructure. A lot of cultural sites are here. Also, Almaly District can boast about good transport communication.

Nur-Sultan. Analysis of key socio-economic indicators

Nur-Sultan (Kazakh: Nur-Sultan, earlier Astana) is the capital of the Republic of Kazakhstan since 10 December 1997. The city is located in the north of the country, on the banks of the Ishim River.

The population of the city is 1,078,384 people as of 2021 according to the official statistics (https://stat.gov.kz/).

The territory of the city is 722 km².

Over 28,000 people are officially unemployed in the capital of Kazakhstan. According to the job centre, the unemployment level in the fourth quarter of 2021 was 4,6%, which is 0,3% below the republican number.

Salaries in Nur-Sultan are one of the highest in the country. The average monthly salary in 2021 was 376,265 tenge, which is approximately 67,728 rubles (as of April 2022, the Kazakh tenge against the Russian ruble was 1 to 0,18).

Analysis of housing development

An urgent need for increasing per capita housing in the Republic of Kazakhstan has been on the agenda for years. The amount of construction works has been increasing at a high pace.

Housing delivery in Nur-Sultan has showed a significant growth in the last two years. Moreover, the number in 2019 was the lowest in the last five years.

Nowadays Nur-Sultan is the leader in housing delivery in the country. At the same time, there are serious problems with developers’ reliability — there are delayed construction projects and hoodwinked homebuyers.

The pandemic and the quarantine that limited the possibility of leaving your house for long forced property buyers to be more demanding about its quality.

Experts note that buyers started to pay more attention to the layout, materials, noise insulation level, the development of infrastructure. There was seen a rise in the number of deals on detached houses. The number of residential property sale and purchase agreements in January 2022 rose by 27,4% compared to the figure in January 2021.

Analysis of prices. Housing development

The average price, according to the National Statistics Bureau (https://stat.gov.kz/), a study of Kursiv (https://kz.kursiv.media/en/), in March 2022. The dollar rate in March 2022 was about 458 tenge.

The real estate market of Kazakhstan has been in fever for the third year in a row. In 2020, it was affected by coronavirus, in 2021, the possibility of using pension surpluses unprecedentedly raising prices exploded the housing demand.

Experts forecast that an anxious trend will continue in 2022 — the growth of the dollar rate and price for construction materials makes developers and property owners to raise housing prices in tenge (https://kz.kursiv.media/en/).

Nur-Sultan is notionally divided into the right and left banks. Old Soviet-era buildings and industrial zones dominate in the right riverbank. Mainly new builds were erected in the left bank — they started to appear when Nur-Sultan (Astana) became the country’s capital. All government departments and business centres are located here now.

Experts think that real estate in the left bank, close to Bayterek and Botanic Garden is in higher demand in Nur-Sultan. Comfort and business class facilities are built there. There is a local demand for comfort and economy class facilities in the “old town.”

In 2021, there was seen a trend for the demand for flats in three-four-storey houses, which are in suburban town where every person has a plot and car park. Three-storey townhouses with terraces on the roof are popular to, there can be two-three flats in one entrance.

Yulia Prokhorova

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The author’s opinion doesn’t necessarily coincide with the position of Realnoe Vremya’s editorial board.