Urban planning: Master plan for the capital envisions vast changes to the sector

With Mongolia’s economic boom in its early stages, several key questions remain unanswered that will have profound implications for its real estate sector in the future. A lack of urban planning has left the country with a serious pollution problem, transportation and infrastructure deficits, and a large-scale shortage of affordable housing.

CATCHING UP: How national and city-level politicians respond to these challenges will be crucial to determining the future value of certain areas of the capital city as well as in a host of second-tier cities set to develop fast. Some answers about their plans are found in the current master plan for Ulaanbaatar, the Ulaanbaatar Master Plan 2020. Concerns about this plan’s feasibility, however, make the question of implementation an important one.

Ulaanbaatar as it stands is a sprawling city in which individual responses to the country’s economic progress have overwhelmed the visions of leadership. This is a change, in a historical context. The capital has in previous times evolved according to plans, mostly of Soviet origin. The first master plan for the city was produced in the 1950s, and three more were produced to mandate the pace of expansion to 1990. However, during Mongolia’s transition from a socialist economy to a market one, urban planning ceased. The city caught up in 2001 when it introduced its fifth and current master plan for the period to 2020. Despite it, however, the thriving economy has pushed the city further away from planned growth.

PRESSURES: Ulaanbaatar is now ringed on three sides with a particularly Mongolian version of a shanty town – neighbourhoods of primarily gers, the round felt tents that herders live in, without streets, sewers, power or any other services. Herders have been abandoning their traditional semi-nomadic way of life and are moving to Ulaanbaatar and some other secondary cities, in part because cold winters have been killing off the herds and leaving people without their animals, which for herders are the primary liquid asset. Because laws allow Mongolians to buy up to 0.7 ha of land around the capital city for little more than the transaction fees, there are now more residents of the city and its environs living in temporary structures than in permanent ones.

These urban poor use coal-fired stoves to heat their tents and cook. That reliance on low-grade coal, typically with high sulphur content, made Ulaanbaatar the world’s most polluted city as of 2011, according to the World Health Organisation. Finding a solution to this problem is widely considered to be one of the country’s top priorities.

THE PLAN: The 2020 master plan defines the Ulaanbaatar metropolitan area as anything within a 80 km radius of the centre, Sukhbaatar Square. That means it includes several spots that serve as satellite cities, such as Nalaikh and Zuunmod. But the master plan for the city also assigns roles to municipalities outside that area, such as Baganuur, a coal-mining town 140 km away, and Bagakhangai, 90 km away.

In part thanks to the mountains to the north and south of Ulaanbaatar restraining its growth, the plan calls for a “compact city model’’ for the capital, in which a high population density is the goal in order to prevent sprawl, minimise stress on the environment and maximise the land available.

According to figures from the Japan International Cooperation Agency (JICA), which was contracted to evaluate the plan and reported its findings in 2009, this would mean large increases from the current density of 6000 people per sq km in the city centre. That number would increase to some 23,700 in the central business district (CBD), 13,700 in the inner city area, around 9000 in the wider urban zone and about 5000 in the suburbs.

In order to make that happen the plan calls for an end to several existing land uses in the city. The south-west area of Ulaanbaatar is an industrial zone that is envisioned to be reclaimed for housing, as is the area just to the north of the CBD, where the Mongolian National University is located. These activities would be moved into fringe districts.

The grand vision includes setting aside as much space as possible for residential developments. Less than half of the city’s residents live connected to the electricity grid, water pipes and sewage system, and the goal is to increase this to 82% by 2020. That means clearing out industrial and institutional uses, but also clearing out the ger districts to make way for apartment blocks that can house those residents in a denser environment, as well as one cheaper to connect to basic infrastructure.

SUPPORTING INFRASTRUCTURE: The plan also envisions a metro system with two lines – an east-west line and a north-south line, with a total of 27 stations. These would be below ground in the city’s urban areas, and connect at a subterranean station below Sukhbaatar Square. They would also create the potential for underground shopping concourses connected to the metro stations. That makes sense for Ulaanbaatar because of the country’s frigid winters. Storefront retail is expected to give way to mall- or concourse-based shopping on account of the weather, and underground plazas have proven popular in cold-weather cities such as Toronto.

Transportation is a key part of the plan, which envisions adding several more bridges to reduce congestion on roads, and addressing issues such as a shortage of downtown parking, more paved roads, and diverting freight rail operations out of the city to leave more room for passenger services.

In order to reduce pressure on Ulaanbaatar the 2020 master plan envisions several second-tier cities developing as smaller-scale economic centres in order to spread the internal migration trend to other places. The eight cities named in the 2001 plan are Khovd, Choibalsan, Zuunmod, Undurkhaan, Uliastai, Erdenet, Khar Khorin and Darkhan.

Mongolia’s economic progress since then, however, may make other cities suitable candidates as well. These could include Sainshand, a south-eastern town earmarked for development as a logistics and industrial centre, and Dalanzadgad, the city with the airport closest to the country’s two flagship mining projects, Oyu Tolgoi and Tavan Tolgoi.

IMPACT OF THE PLAN: There is considerable scepticism about the state and the city government’s ability to execute the master plan. Since it was conceived the ger districts have grown unabated, and many of their residents have put down more than just their gers but some roots as well: brick homes and simple retail operations are emerging there. Switching to apartment living would rob many of their retail operations and subsistence gardens, the ability to keep some livestock, and the physical space that Mongolians generally tend to prefer. The 2009 JICA study found that about two-thirds of urban ger dwellers would not be willing to move to an apartment in the same area. Many are aware that the land they own is rising in price as Mongolia’s economy expands, and the city has promised to extend basic infrastructure to some ger areas. Therefore, getting these people to move will be difficult and also expensive, given the cost the state may have to pay to acquire their land. Mongolia has thus far rejected the idea of eminent domain in its laws.

SHORTAGE OF HOUSING: If the affordability of land is an issue then the affordability of building on it is as well. The government aims to address the housing shortage with a plan to build 100,000 homes in the next several years, three-quarters of this number in Ulaanbaatar. However, the cost of doing so would be greater than the current GDP and would require outside financing. Sceptics point to a similar programme earlier in the 2000s to build 40,000 homes. When the government’s capacity to do so proved insufficient, it used private-sector building as part of the count, and the concessionary mortgages tied in with the project often went to wealthy Mongolians who bought new residences for investment purposes, instead of the original purpose of helping those in need to purchase a home.

A metro system is also part of the master plan, but is considered an ambitious project. Perhaps as a replacement, the Asian Development Bank is building a bus-rapid transit line along Peace Avenue, the main east-west thoroughfare. If a metro is built, however, that may end up causing significant impacts on land prices in the city. Land values are certainly expected to rise along the key transportation corridors, and metro stations in specific areas would help land buyers figure out where. The building of new bridges in particular would impact real estate prices at the southern edge of the city. In that area, which higher in elevation, elites have flocked to build villas and live in flats that are less impacted by the pollution. However, congestion on the one road from this area, Zaisan, to the city centre has reversed the trend, with some wealthy Mongolians moving back downtown. More bridges could potentially bring new routes and added value to the city’s southern belt.

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The Report: Mongolia 2013

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