Archive for February 4th, 2008
Kazakh Residential Real Estate Sector Ripe for Consolidation
Translated from the Kazakh weekly Business & Power - the original article in Russian can be found here.
Kazakhstan’s construction companies have been forced to search for new sources of capital. As local analysts suggest, now is the time for the builders to switch from relying on bank loans as a sole source of financing to partnering with strategic investors. This may result in increased mergers and acquisitions activity in local real estate and construction sector.
The mid- and long-term outlook of purchasing power among the Kazakh population will likely be lowered - not only as a result of the liquidity crisis, but also because of the of the deteriorating health of the entire economy. Accordingly, builders need to search for alternative sources of funds, and reexamine their strategies and financial models. “Today’s lack of liquidity affects big builders with excellent reputation just as much as small construction companies. The absence of acceptable bank financing shapes no longer only the market for real estate, but the whole consumer sector of the economy as well”, says Bakhytbek Katen, director of NAI Kazakhstan Aristan, a consultancy.
“Recent freeze of construction shook the reputation of the entire real estate market”, says Oleg Alferov, the vice president of National Association of Realtors. “As a consequence, buyers’ activity in the fourth quarter of 2007 was at its lowest level in the last three years.”
Present situation is favorable for those interested in entering the Kazakh real estate and construction sectors. The barriers to entry are low compared to the last few years, and interested parties may be able to acquire shares in new and unfinished projects relatively cheaply.
Alexander Kalinin, the chairman of Kazakhstan Estimators Association agrees: “The banks were focused excessively on the construction sector. Mortgage banking, construction and other real estate loans and similar financing deals accounted for 56-70 percent of the banks’ credit portfolios.” Under the current conditions, the sector is ripe for consolidation. According to Kalinin, the market will soon be dominated by large corporations characterized by high quality of their property portfolios, balanced price policies and additional sources of financing besides Kazakh banks. “One such institution could be, for example, corporation ‘Basis A’. I have no doubts that it is backed by serious shareholders with strong interest in Kazakhstan’s economy.” Other business models will have difficulties surviving in the new conditions, suggests Kalinin.
News Roundup - February 4, 2008
Reuters: U.S. and Kazakhstan snub Russia with new military deal
The United States promised Kazakhstan on Friday to help it bring its armed forces up to NATO standards in a new military cooperation pact certain to irritate Russia, Kazakhstan’s former Soviet overlord…
Kazinform: Defense Ministries of Kazakhstan, US signed MoU
A memorandum of understanding regarding realization of 2008-2012 Five Year Cooperation Plan has been signed between the Defense Ministries of the US and Kazakhstan today…
Reuters: Russia CTC Media to buy into Kazakh Channel 31
Russian entertainment television company CTC Media Inc said on Friday it had signed a deal to buy a 20 percent stake in Channel 31, Kazakhstan’s fourth largest television network in terms of audience share…
Spero News: Kazakhstan: Energy profile
Kazakhstan has the Caspian Sea region’s largest recoverable crude oil reserves, and its production accounts for over half of the roughly 2.8 million barrels per day (bbl/d) currently being produced in the region (including regional oil producers Azerbaijan, Uzbekistan, and Turkmenistan)…
TREND: Deterioration of power stations in Kazakhstan comprises 60%
Deterioration of equipment in the power stations in Kazakhstan made up 60%, the Chairman of the Board of Samruk-Energo Erlan Upushev said to journalists in Astana on 1 February…
Budapest Business Journal: Kazakhstan tries to forge new energy - export order
The Kashagan dispute, which ended with Kazakhstan greatly expanding its role in the venture, enabled Astana to shed its junior partner status when it comes to interacting with foreign conglomerates. Victory in a dispute over the Kashagan oil field seems to have emboldened Kazakhstan’s government…
In an interview to Kazinform correspondent Stephen Wermert, Country Director of the Asian Development Bank Kazakhstan Resident Mission has told about the ADB’s strategic focus in Kazakhstan, what differs the bank from other development agencies and why the Asian background is so good, Kazinform reports…
Kazinform: Kazakh Government signed 4 agreements with World Bank
Kazakhstan’s Government and the World Bank have signed four agreements on the loan worth USD 173.9 mln, which will be directed to the realization of a number of important projects…
Jane’s: US seeks Caspian energy reserves
An often-resuscitated term ‘the Great Game’ has been used to describe the jockeying for influence in Central Asia and access to its rich hydrocarbon reserves. Yet, since Russia’s relative renaissance under President Vladimir Putin, competition for energy has resembled less of a game and more of a one-sided walk in the park for Moscow…
Oil and Gas Journal: Trans-Black Sea pipeline studies under way
GUEU-White Stream Pipeline Co. Ltd. reported Feb. 1 it is conducting engineering and marketing studies on the viability of constructing and operating a gas pipeline from Georgia across the Black Sea to Ukraine and Romania…
Eurasia Daily Monitor: Trans-Black Sea pipeline: Another chance for Georgia and Europe
Ukrainian Prime Minister Yulia Tymoshenko has proposed that the European Union and Ukraine join a project for a gas pipeline from Turkmenistan via the Caspian Sea, South Caucasus, and Black Sea to Ukraine and EU territory…
Eurasia Daily Monitor: Astana shifts accent from political reform to economic stability
On January 23, addressing members of the Political Council of the ruling Nur Otan party, Kazakhstan’s President Nursultan Nazarbayev announced several key personnel changes. Bakhitzhan Zhumagulov, the deputy chairman of the party, would be replaced by Adilbek Zhaksybekov, head of the presidential administration…
The Washington Times: Bill Clinton’s Kazakh connection
Bill Clinton helps a Canadian mining magnate win a lucrative uranium contract from Kazakhstan’s state-owned nuclear holding company Kazatomprom. The magnate subsequently donates $31 million to the William J. Clinton Foundation and pledges $100 million more…
Globe and Mail: Bill Clinton under scrutiny over business dealings
In an expansive front-page story, The New York Times insinuated that Mr. Clinton may have helped reclusive Canadian mining mogul Frank Giustra land a group of lucrative uranium properties from the government of Kazakhstan…
Ok – you were probably thinking the Roberts Report was defunct, but that indeed is not the case. I have lots of excuses for my conspicuous lack of postings, the most persuasive of which has been the overall depressing nature of recent news in the region since my last post…
Chicago Tribune: Falconry tradition soars back
Under a cloudless sky on the Kazakh steppe, a gray hare scampers over the snow-dusted scrub, about two football fields away from a young hunter in green camouflage and the leather-blinkered golden eagle he supports on a thick, black falconer’s gauntlet…
International Herald Tribune: U.S. policy shifts in Central Asia
Relations with the United States have been largely frozen since 2005, when Uzbekistan, bristling under U.S. censure for a bloody crackdown against anti-government demonstrators, evicted the Pentagon from an air base that had been used to support the war in Afghanistan…
Radio Free Europe / Radio Liberty: Central Asia: Region’s economies fail to seize golden opportunity
For impoverished Central Asian countries with gold deposits — particularly Kyrgyzstan and Tajikistan — that commodity’s all-time high on world markets should bring welcome benefits to their economies. But, for the moment, they are not rushing to cash in…
