Construction & Real Estate
From The Report: Mongolia 2013
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Mongolia’s real estate sector is likely to feature fast-rising rents, land values and sales prices for at least the next several years. Per capita GDP is forecast to triple by 2016, creating a jump in buying power that will add to an already short supply of homes in the capital. Thus Ulaanbaatar seems poised to experience major price hikes. There is an increasing demand for housing as the nation’s young population is moving from extended-family households to nuclear ones. There has been little interest in building low-cost or middle-income housing so far. According to some estimates, another 175,000 housing units are needed in the capital alone. However, the construction sector’s present building capacity is estimated at around 6500 apartments per year. Mongolia’s construction industry is young and growing and thus far has been unable to keep up the demand generated by the mining boom. Should Mongolia succeed in firming up its legal environment, it can expect a great deal more foreign interest and investment.

This chapter contains interviews with D. Battur, President of Jiguur Grand Group, and J. Od, President of MCS Group.

Articles from this Chapter

Overview

Building momentum: Rent and sales prices likely to rise rapidly due to supply constraints
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Thanks to a shortage of supply, Mongolia’s real estate sector is likely to feature fast-rising rents, land values and sales prices for at least the next several years and perhaps more. The market is highly focused on the capital city, Ulaanbaatar, which is under pressure due to a speedy rate of urbanisation; supply constraints due to capacity, weather, geography and capital; and the rising wealth of its residents. Though some segments of the market, such as office space, may see an oversupply…

Analysis

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

Analysis

Building blocks: Transformation of towns outside Ulaanbaatar
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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…

Interview

OBG talks to D. Battur, President, Jiguur Grand Group
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Interview: D. Battur How can the urban planning process be improved? D. BATTUR: The public institutions working in relation to the urban development sector should be made more stable. Due to the current election system, the personnel in these institutions are constantly changing and there is a lack of continuity in policymaking. If you change the staff, the objectives change and the policies change. Therefore, in order to improve the urban planning process, we need to facilitate human resources…

Interview

OBG talks to J. Od, President, MCS Group
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Interview: J. Od What can be done to make affordable housing projects viable for the government and developers? J. OD: There is definitely a market for affordable housing in Mongolia. At the same time, construction projects have various fixed costs, all of which are going up, including wages. In terms of housing programmes, it is important for the government to be consistent on the infrastructure and the mortgage side, as well as with the criteria that define “affordable housing”. By my logic,…

Overview

Increased activity: Much to do in the years ahead as the state invests in various projects
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The sector has been moving from a state-owned and -controlled industry to one driven by for-profit firms for the past two decades. However, this transition has been complicated by the challenges of extreme climate, a shortage of trained workers and logistical obstacles preventing the establishment of a steady flow of low-cost and on-time materials in the supply chain. In recent years, as the mining sector’s growth filters through the economy, domestic construction sector players have been…

Analysis

High consumption: Huge demand for cement as large projects get under way
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The cement sector features characteristics common to so many markets in the country’s economy: short supply, mushrooming demand, Chinese imports and plans to boost local capacity. The importance of new domestic supply cannot be understated, as the government’s plans in the next five years include $40.5bn in spending on major projects in energy, housing, rail, roads and industry. Each will address a key economic constraint and each will, to varying extents, require cement to make it happen.…