The Way Housing Can Become Affordable in Kazakhstan

“Baiterek” National Managing Holding” JSC at the site of Astana Economic Forum has raised the issue of the role of the Government in the development of housing affordability for the population and brought together the leading experts in this field from the countries of South-East Asia.

The panel session organized by the Holding aroused great interest among the delegates of the forum not only by the stated topic, but also by the speakers from South Korea and Singapore. These countries have interesting practices that are very useful for Kazakhstan, since our country is one of the leaders in housing construction in the CIS and is currently actively engaged in making it accessible to the public.

- Lately, there is large-scale construction underway in almost all the cities (we are already beginning to cover regional centers and are preparing a special program for rural areas) within the framework of credit housing, in which Baiterek Holding actively participates. I would like to express special thanks to them. And I believe that this system is one of the most effective. It allows purchasing housing for people who have a constant average income. We’ve set the price parameters for such housing: 140 thousand tenge per square meter in regional centers, and 180 thousand tenge in the cities of Nur-Sultan, Almaty, Shymkent, Atyrau, Aktau. The price parameters have been set taking into account the solvency of the population, therefore, they are constant rates for us and have not been changed for the past five years, - said the First Vice-Minister of Industry and New Technologies of the Republic of Kazakhstan Kairbek Uskenbayev. 

Currently, there are more than seven tenge of private investment attracted per one tenge, which the state is providing in the form of investment in housing construction. Meanwhile, according to Anuar Omarkhojayev, the Deputy Chairman of the Board of “Baiterek” NMH” JSC, the level of Kazakhstan’s own housing per capita indicator is below world standards. To achieve the target indicator of 30 square meters per capita, it is necessary to increase the current housing stock by 220 million square meters of housing or by more than 60% in the next 11 years.

- To solve the set out tasks, we have studied international experience of developed countries. According to the results of the review, the experience of Singapore and South Korea and Turkey turned out to be suitable for our conditions, where the Single Operator comprehensively implements the state housing policy through carefully planned mass development of the city blocks with all the necessary amenities for the public, - Anuar Omarkhojayev emphasized.

The speaker is convinced that the Single Operator, which is proposed to be established in Kazakhstan, would be able to consolidate assets and improve efficiency through comprehensive support tools, ranging from strategic planning and design to full project support at all stages of implementation, including engineering, digital monitoring and subsequent operation. And this step is one of the three key factors in creating a modern affordable housing ecosystem, declared today by Anuar Omarkhojayev.

The second factor, according to him, is affordable financing through a wide range of tools for all industry participants, primarily private developers and the public.

- Today, one of the key problems in housing construction is “expensive” funding for developers and the requirement for a secured collateral base on the part of commercial banks. A single housing operator consolidating the assets of our individual subsidiaries will be able to attract substantial market resources, mixing them with current financial flows and reducing the cost of funding for private developers, - Anuar Omarkhojayev explained.

The third key factor is the construction industry digitization. In other words, the introduction of new technologies can increase investment pro-activeness in the housing industry.

- Great opportunities are being opened up to reduce the cost of housing and infrastructure construction through the use of the so-called “Online Marketplaces”, which on their platform will be able to directly connect customers and suppliers without intermediaries. This will allow reducing the operating costs of all parties by an average of 20%. At the same time, the introduction of a system of long-term offtake contracts at fixed prices will allow ensuring the workload of house-building plants and domestic producers of building materials, - said Anuar Omarkhojayev.

“Marketplaces” should be as open as possible and provide a full amount of information that simply neutralizes unscrupulous suppliers. If we take into account that the share of building materials in the cost of construction is over 55%, then the cost of construction per one square meter of housing can be reduced on average by 10%.

The leading consultant of Singapore Cooperation Enterprise, Yap Chin Beng, has supported the proposal to establish a Single Operator in Kazakhstan.

- There will be a high demand for housing in Kazakhstan. This will happen in 10-15 years. This needs to be taken into account and planned. A single operator will become a good strategy for resolving the issue, - the speaker said.

Mr. Yap Chin Beng closely cooperates with the top management of the Housing and Development Board (HDB) which was founded in 1960. According to him, the HDB has built 100 thousand apartments for 500 thousand people. It is worth noting that the majority of the population in Singapore lives in public housing.

- One family can have only one apartment from the HDB. We do not allow them reselling it until they acquire it in five years. The area of ​​public housing is ranging from 36 to 115 square meters, depending on the needs of the family. For low-income families, we are providing rental housing, purchase grants. Low-income families get more support from the government, - he said.

The speech by Lee Chae Kwang, the President of the Korea Housing & Urban Guarantee Corporation, was also informative. In this country, the problem of housing affordability is solved by the National Housing Fund launched in 1981 and managed by the Korean government.

- The Korean affordable housing policy aims to increase it. Therefore, those who do not have their own housing will have rental housing. Those who have low incomes, there will be low rental load. And the Korean government plans to commission one million affordable housing in the next five years. We will be using the existing land, also building new housing to increase the supply. The Korean government plans to provide adapted housing for those with low incomes. There will be special districts for newlyweds as well as for the elderly, - Lee Chae Kwang informed.

It should be noted that more than 350 people have taken part in the past half-hour panel session.

It should be recalled that Astana Economic Forum has been held in the city of Nur-Sultan for the 12th time. This year, its topic was “Inspiring Growth: People, Cities, Economies”. Experts, businessmen, politicians and scientists from 74 countries of the world have arrived in the capital of Kazakhstan, and the number of delegates exceeded five thousand people.

Within the framework of this forum, Baiterek Holding also held another panel session of “The Role of the Government in the Venture Capital Development”, which took place on May 16 at the Congress Center.

Reference:

“Baiterek” National Managing Holding” JSC was established in accordance with the Decree of the President of the Republic of Kazakhstan dated May 22, 2013. The key institution of the Government of the Republic of Kazakhstan that complies with the advanced standards of corporate governance and ensures the implementation of the objectives for the sustainable development of the economy of Kazakhstan through its diversification, support for innovation, export development, increase in labor productivity. The Holding includes: Development Bank of Kazakhstan JSC, Investment Fund of Kazakhstan JSC, Zhilstroisberbank of Kazakhstan (HCSBK) JSC, Kazakhstan Mortgage Company MO JSC, KazakhExport EIC JSC, Damu EDF JSC, QazTech Ventures JSC, Housing Construction Guarantee Fund JSC, Kazyna Capital Management JSC, Baiterek Development JSC, Kazakhstan Project Preparation Fund LLP.