In January 2016, 759,468sqm of housing was under construction, which corresponds to an 11.6% increase on the same period the year before.

The construction sector in Kazakhstan has been performing well as of late, and has experienced steady growth along with an increase in demand for construction materials and labor. This in turn has allowed companies present in the sector to enjoy an uptick in profits, something that has been very welcome. For 2015, the total value of construction projects came in at KZT379 billion, a notable increase on 2014's figure of KZT353 billion. One of the main reasons for this growth has been the construction of a number of projects, with a surge in residential schemes one of the main drivers behind this growth. An influx of foreign companies in the market has also helped to spur the market and projects are increasingly being taken on and completed by foreign firms; something that looks like to continue into the future.

With a rising number of projects comes a rise in investment. In February 2016, KZT43 billion was invested in housing construction compared to KZT39 billion in February 2015. A larger increase was seen in January 2016, when KZT36 billion was invested compared to KZT30 billion in January 2015. Total investment in fixed capital also saw gains over the year when KZT339 billion was invested in February 2016 compared to KZT311 billion in the same period the year before. This increase has been steady for a number of months, with every month in 2015 experiencing a high investment rate compared to the corresponding month the year before. According to EY, real estate and construction are in the top five most attractive sectors for FDI, which is evidenced by the right investment in fixed capital.


The boom in housing has definitely been a key force in the growth of the sector. Behind this drive in housing is the government's 2011-2020 Housing and Utilities Sector Modernization Program. The government initiative aims to renovate and create condominium facilities and affordable housing for all citizens of Kazakhstan. In line with this, the Affordable Housing Program 2020 has been fundamental in creating more housing. In January 2016, 759,468sqm of housing was under construction, which corresponds to an 11.6% increase on the same period the year before, according to the Agency of Statistics of the Republic of Kazakhstan. Naturally, the majority of these housing units are in Astana and Almaty, with 176,644sqm and 133,002sqm under construction in the cities, respectively. The rise in demand for housing can be attributed the financial crisis the country suffered recently. During this period, residential construction suffered and demand for new stock increased. Once the crisis was over, the government launched a number of schemes to stimulate construction and get the ball rolling.


Oddly enough, while the value of construction projects is on the rise as well as the square meterage of residential units increasing, the cement market has seen a decline in 1Q2016. Overall, the cement market fell by 16% in YoY terms in 1Q2016, with the expectation for the year also following this trend. Experts predict total production for 2016 will fall to 8.5 million tons compared to a total of 9.6 million tons over 2015. This in turn is affecting the local companies. Steppe Cement, a leading cement producer in Kazakhstan, reported a fall in sales in 1Q2016 of 12% from $5.98 million from $6.79 million in YoY terms. Steppe Cement hopes to regain market share and lost revenue through a boost in sales in the south of the country over the rest of the year. Over 1Q2016, Steppe Cement produced 190,953 tons of cement, down from 193,000 tons in 1Q2015. Despite the fall in revenues and production, Steppe Cement managed to increase its market share in the country by 2% to reach 16% in 1Q2016 compared to the same period the year before.

One of the main problems the sector is facing is a lack of locally produced construction materials. The gap in production is being filled by imports, which in 2014 totaled nearly $700 million. However, this figure does not include wood, metal, and plastics, which amounted to $1.4 billion, $4.2 billion, and $5.8 billion, respectively, according the Agency of Statistics of the Republic of Kazakhstan. While not all of these imports are bound for the construction market, imports are significantly higher than at first glance. Domestic production is set to increase as it hopes to claw back some of its deficit. In 1Q2016, steel production in Kazakhstan was a little under 1 million tons at 982,084 tons of crude steel, a 10.2% increase on the same period the year before according to government statistics. In January 2016, steel production stood at 345,000 tons, a significant increase on the same month the year before that was around 240,000 tons. In terms of copper production, in February 2016, the country produced a total of 33,332 tons of copper compared to just over 29,000 tons in February 2015. In terms of ceramics, Kazakhstan currently has only one plant, in Aktobe. While the plant declared bankruptcy in 2009, it received a loan of $1.4 million from the state and the Damu Entrepreneurship Development Fund and underwent significant refurbishment in 2013. The plant employs 160 workers and has a total capacity of 1 million sqm of ceramic tiles per annum. The refurbishment allowed the plant to produce high-quality tiles at a competitive rate, allowing production at the plant to continue.

The country as a whole is still recovering from the financial crisis and companies are still cleaning up the fall out. However, the construction market is going a long way to speed that recovery along. Many predict the sector will continue to grow, especially in the housing segment as demand continues to drive the push for new builds. In regard to construction materials, the gap in supply is currently being filled by imports; however, as confidence grows in the market once again it is likely that foreign and domestic companies will step in to boost domestic production.