Mongolia is undoubtedly the haven for property development in the eastern frontier. Bordering some of the biggest economies, China and Russia, it stands out as an oasis in a desert of opportunities. Finding an investment goldmine bordered by an area vastly developed is a rare occurrence.
The IMF forecasts that by 2016, Mongolia’s economy shall rise at a rate of 14%. This is a result of a thriving mining industry, coupled with the increased demand for natural resources by big economies like China. Rapid economic growth is expected to continue at double digit pace thereafter.
The growth of the mining and financial services industry has seen an upsurge in the demand for high-end office space. The rise in economy has already seen the entrance of international brands into Mongolia. This has raised the earnings for the locals, resulting in the enlargement of the middle class. Retail schemes that are well designed and strategically positioned are able to tap full occupancies and are able to set market rental levels now and in years to come. There has also been a rapid increase in the number of international investors and expats looking for international standard accommodation and commercial space.
The property market in Mongolia is highly focused on the capital city, Ulaanbaatar. The challenges however include the fact that the city is under pressure due to a fast rate of urbanization, supply constraints due to capacity, weather, geography and capital and the rising wealth of its residents. There are nine administrative districts in the capital. The central District, Sukhbaatar, hosts the parliament and all other government buildings .It is also home to all but one of the country’s high end office towers.
There are significant urbanization and demographic disparities within Mongolia .Ulaanbaatar, the capital city, has a population that accounts for approximately 46% of Mongolia’s population of 2.8m. This is projected to grow to 54% by 2020. Ulaanbaatar is bordered by mountains either side of the city. These restrict where the expanded population can live. Property development in the city must seek to address this challenge. And whoever provides the better solution can smile their way to the bank.
It’s a fact that thirty percent of the population is under fourteen. Anything built is built for the future. The country is also experiencing a rapid development of the mortgage market. Currently, there are reduced financing constraints for homebuyers. This coupled with the steady rise in the purchasing power of the local community is welcome. This young group will undoubtedly benefit from these and more advantages in future, thereby providing sustainability for the market.
The property market holds the future of Mongolia’s development blueprint. It is no overstatement to infer that property development in Mongolia serves as a benchmark for any future investment in Mongolia.