Introduction of the second wave of quarantine restrictions on July 5 made people realize that putting things off is not the best strategy. The population of Kazakhstan is adapting to the situation, thanks to which many business areas have begun to revive, including the primary housing market. Developers, in turn, were ready to offer a remote service for buying real estate to their potential customers as early as in March. This service allowed many, even while in isolation, to continue shopping for a future home.
Increase of the number of new residential buildings
Despite the quarantine, in the first half of 2020, more than 6 million square meters of housing were commissioned in Kazakhstan. According to the website korter.kz, most of the new buildings have been constructed in the capital: in a month, 27 new residential compounds (RCs) were commissioned here. For smaller cities, leaders in commissioning of new housing include Aktau (+7 RCs), Atyrau (+4 RCs) and Shymkent (+2 RCs).
The growth of buying activity and the recovering demand for new housing serve as incentives for developers to further increase supply through commissioning new housing objects.
Rising prices for new housing
Developers took into account the devaluation of tenge and adjusted prices, raising them by 3–5% on average. Average tenge prices, according to korter.kz, have grown in seven cities out of nine. For example, in June, it was possible to buy an apartment in Nur-Sultan at a minimum price of 140 thousand tenge, or $346 per square meter at the June rate, whereas in July, the minimum price rose to 160 thousand tenge, or $396. Only Shymkent and Atyrau saw the prices lower in a month: in Shymkent, a square meter of housing got slightly cheaper, by 500 tenge (about $1.20), while in Atyrau the price dropped by 80,000 tenge at once (about $198). This is due to the emergence of new residential compounds on the market, which in the early stages of development can be invested into at a lower price.
The most expensive property is, as usual, in the southern capital of Kazakhstan, Almaty: in July, an apartment could be bought at an average price of 478,800 tenge per square meter ($1,185). The most inexpensive housing is in Aktobe: 166,100 tenge per square meter ($411) on average.
The cost per square meter depends not only on demand, but also on building materials, the price of which is fixed in foreign currency. The next stage of primary housing will be built using newly delivered materials, which may cause real estate prices to rise.
Developers are trying to make their housing more attractive for investors with various promotions, bonuses and interest-free installments. The construction market is also helped by government programs, such as “7-20-25” (7% annual rate, 20% initial installment and 25 years for the maximum mortgage term) and the new “5-10-20,” an extended version of the Nurly Zhol stimulus plan, which will account for gross family income.
What kind of housing is in demand
In Nur-Sultan and Almaty, due to forced self-isolation, the demand for cottage-type houses has increased by 35–40%. It is possible that by the end of 2020, interest in suburban housing will only grow. Developers have already responded and raised prices for cottages and townhouses.
In other Kazakhstan cities, buyer demand continues to be dominated by one- and two-room apartments with an optimal price-quality ratio.
Further growth of the primary housing market depends on the ending of the quarantine and the recovery speed of the republic’s economy. It can be said with confidence that the demand for economy and comfort class apartments will stay the same, while demand for more prestigious housing will likely fall.
* In this article, the tenge-dollar exchange rate is 404 KZT = 1 USD as of July 1, 2020.
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