After the Soviet Union collapsed, peoples’ lifestyles changed. What trends have you observed in the population’s expectations in real estate?
DASTAN URAKOV Since the Soviet Union collapsed, a lot changed in consumer demands. Back then 6 sqm was allocated per head in residential projects. We started our minimum square meter per head from 12. We are also dealing with economy class, business class, and elite class housing, and of course since the crisis elite class is not in high demand, and that is why our company has focused on middle class projects.
Astana, Almaty, Aktau, and Atyrau all vary in their real estate prospects. What are the opportunities for development in Aktau and Atyrau?
MATTHEW BOND The markets are not very different from one another. They’re at different stages in their evolution and they have slightly different supply characteristics. Atyrau and Aktau are very interesting as they’re fast growth areas. They’ve been very resilient to the crisis because they’re essentially oil-backed. Oil prices have supported activity there. I think Atyrau and Aktau are two areas where there is significant opportunity on the residential and hotel side, in the retail and office sectors, really in just about all sectors except perhaps the resort sector.
As the market picks up, which sectors are acting as engines for growth in the construction sector?
DU The population growth rate in Kazakhstan, especially in Almaty, is around 5%. Additionally, the commercial sector is buying office space as it wants to accumulate assets. This is leading to high sales in the residential and commercial areas in the private sector.
What is the state of the class A and B office space market in Almaty?
MB We as a company produce what we consider to be international A-class office space, and that’s quite different from the local A-class grade. There is only around 80,000 sqm of international A-class space available, all of which has been developed by us. Occupancy in the remaining A and B offices is around 70% to 75%, so it’s recovering.
You have stated that you are looking into attracting investors from the Arab world. How are you looking into taking your expertise abroad?
DU Because MAG has good experience and employs best practice standards in Kazakhstan, we are looking at inviting investors from abroad to work with us. At the same time we are trying to establish a first step in Saudi Arabia via joint ventures with local businesses to use our experience in projects to structure our investment plan, construction, and procedures. In Kazakhstan we work with a design company called Waterman, which makes designs for trade centers, and we are also working with French companies to benefit from their international experience.
What opportunities will the future hold for the sector in Kazakhstan?
MB There are many opportunities within the residential sector, and when combined with destination creation, like Chimbulak, we are creating real places to be. Chimbulak is a unique place; it’s so close to the city. Medeo could also be a very interesting place for a potential development. Kapchagai Lake is another option, and there’s some activity there already. Within a four-hour flight from Almaty you have access to about 1.3 billion people. Sure, there’s a limited number of people who have got the right spending power, but even if it’s only a small fraction, it’s still quite a sizable market. The pure population numbers within this sort of radius are quite interesting. This allows us to solve the perennial problem of a small population in Kazakhstan in terms of investment opportunities. To create a destination is something that is not to be taken lightly. We are changing perceptions, campaigning, and raising international exposure and awareness.
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