Building blocks: Transformation of towns outside Ulaanbaatar

Ulaanbaatar is the only city in Mongolia with more than 100,000 people, but opportunities outside the capital city are in many cases as attractive as those within its borders. Towns that have until now been sleepy frontier outposts are set for a transformation thanks to the mining sector – labour demands at the mines will mean the need for housing, services, industrial applications, transportation centres and other services that will mandate profound change, in particular some towns in the Gobi Desert. They include the provincial capital Dalanzadgad and in towns such Khanbogd, which is next to the country’s highest-profile mining project; Zamyn Uud, a border town next to China; and Sainshand, a south-eastern town envisioned to transform into a transportation, logistics and industrial centre. In several of these places there is a complete absence of supply of some types of buildings; Sainshand’s only purpose-built office space, for example, is a government building.

DALANZADGAD: The capital of the Omnogovi aimag (province) has perhaps the greatest potential because it is the administrative centre of the province that is home to both the Oyu Tolgoi (OT) and Tavan Tolgoi (TT) mining projects. It also hosts the regional airport, Gurvan Saikhan Airport. The only others in the province are private airstrips to serve mining companies using chartered flights. There are 13.5 km of paved roads in the aimag, all of them within the boundaries of Dalanzadgad. Office space is in demand because mining companies increasingly have representation here, as are residences – demand pushed up prices in the city centre from a low end of $250 per sq metre in 2010 to $500 per sq metre, and rising to $800 by late 2011, according to R2 Research. Around 15,000 people live in the city, or 60% of the aimag’s total population. Just 4000 of that total live in permanent structures, according to research from M.A.D. Mongolia, an Ulaanbaatar-based real estate investment and research firm. That number, however, is subject to seasonal changes, as traders and other temporary migrants sometimes boost the population above 20,000. The city lacks any tertiary education facilities, but plans for a university or vocational school focused on mining and resources have been discussed, with OT suggesting that it may participate or lead the project.

KHANBOGD: This hamlet of 3000 is 40 km from OT. The Asian Development Bank predicts a surge in population to 15,000 by 2020. In addition to basic homes, offices and retail space, the building blocks of urbanity are not yet all here – the hospital only in recent years began receiving non-stop electricity, after a programme funded by Ivanhoe Mines, the company that has been developing OT and was purchased by Rio Tinto and renamed Turquoise Hill Resources.

KHOVD: This is the economic centre of western Mongolia, located roughly 1300 km west of Ulaanbaatar. It is home to two universities, and would be in proximity to if not a stop on the potential east-west railroad line Mongolia would like to build. As of 2008, according to the National Statistics Office of Mongolia, the aimag has a population of 77,800.

SAINSHAND: This city expanded by half in 2010, roughly adding 9000 people to bring the population to approximately 30,000, as Mongolians and Chinese migrant workers collect here in search of work opportunities, according to R2 Research. Sainshand’s future is based on the idea of an industrial complex to be located here. The city is located on the one international rail-and-road corridor in existence, along the Trans-Siberian Railroad. Mongolia envisions a future with an east-west railroad passing through to carry mined ore from other parts of the country, and an industrial park with factories situated in the city to process the mined output before sending it on as exports. Logistics services are also envisioned. US engineering company Bechtel was chosen to provide planning services.

ZAMYN UUD: Located near the major border crossing with China and a significant economic free zone, Zamyn Uud’s proximity to the Trans-Siberian Railway should help ensure demand in the real estate market.

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The Report: Mongolia 2013

Construction & Real Estate chapter from The Report: Mongolia 2013

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