Rural areas rising: The government plans to revitalise the heartland

Urbanisation has been a major factor in shaping modern Mongolia. Recent demographic changes in the country’s four major geographical areas have stark implications for the construction sector. In 1990 the percentages of the population living in the Western Region and the Khangai Region were similar to those living in Ulaanbaatar, at 20%, 27% and 26%, respectively. By 2000 the capital was home to around 30% of the population, and by 2010 around 40% of the population lived in Ulaanbaatar, whereas the Western Region had shrunk to around 14%, Khangai to around 20% and the Eastern Region to just over 7%. The Central Region, not including Ulaanbaatar, was home to the rest.

HOUSING WOES: Due to these changes, Ulaanbaatar currently faces a major housing challenge. Some 60% of the city’s population, primarily new arrivals, currently live in sub-standard ger (tent) cities. At the same time, many rural aimags (provinces) and soum (counties) have suffered from rapid depopulation and deskilling, as people head for new opportunities in the capital.

With this in mind, the government recently launched the New Development Programme (NDP), a major construction initiative that seeks both to provide proper housing for the migrant population in Ulaanbaatar and to revitalise the regions. Rural road building is part of the plan (see overview), as is the construction of large numbers of houses in each region under the “100,000 houses” project (see analysis). Another major component of the NDP aims to develop the soums.

BACK TO THE HEARTLAND: As the capital attracts a greater proportion of the population, rural areas have begun to suffer from a lack of local funds and, consequently, local amenities, which has further accelerated the urban drift. Under the NDP, the government has embarked on a programme to build 96 soum centres. These will be located in key counties, with each centre being a compound in which a kindergarten, school, hospital, sports and cultural centre, dormitory, mayor’s office and local government services buildings will be located. Each individual compound will cover around 11,700 sq metres and is expected to cost $7m-10m. Altogether, the project is expected to require investment of around $700m. Additionally, the Ministry of Roads, Transportation, Construction and Urban Development (MRTCUD) plans to construct a major housing project – consisting of around 400 new buildings on average – around each new soum centre.

Under the current plan, 28 soum centres are set to be built in the Western Region of the country, 28 in the Khangai Region, 27 in the Central Region as well as 13 in the Eastern Region. As of late 2011 work had already begun on five centres and the project is expected to be completed by 2016. Mongolia’s harsh climate was a key part of the planning process. After testing a wide variety of building models and technologies, Ministry insiders told OBG that the MRTCUD had opted to use Canadian wood-frame technology to construct the centres. The ministry has adopted Canadian building codes for the project, and in conjunction with experts from British Columbia is currently training some 400 students in Canadian carpentry techniques.

MATERIAL WORLD: Wood for the soum centres will largely have to be imported. According to MRTCUD, forest cover in Mongolia is now only around 6%, about half what it was when modern Mongolia was created in 1990. Since then, the country has adopted laws that prohibit the cutting of wood. After substantial market research, MRTCUD announced that much of the wood for the soum project will be imported from Canada. The hope is that by establishing the soum centres, some of the urban migration will be halted or even reversed. The centres could eventually form the nuclei of future towns and, as local economies continue to expand, cities. For the construction sector, the soum initiative represents a potential source of new projects, as the centres will require supporting infrastructure. The project is also expected to dovetail with plans to boost the use of renewable energy in Mongolia. Wind and solar power are abundant in the country’s rural areas, and could help bring about the hoped-for return to the heartland.

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The Report: Mongolia 2012

Construction & Real Estate chapter from The Report: Mongolia 2012

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