REAL ESTATE COMPETITION IN UZBEKISTAN IS NOT MATURE YET

REAL ESTATE COMPETITION IN UZBEKISTAN IS NOT MATURE YET

In the run-up to Dealmakers Forum “Investments, Construction, Real Estate in RF and C.I.S. Countries,” we are pleased to draw your attention to the survey of investment attractiveness of the real estate market in the Republic of Uzbekistan.

Competition in the country’s real estate market is not mature yet, but this very feature proves to be a special factor in the attraction for investors and developers. Currently, foreign companies engaged in the construction of commercial real estate and public facilities operate in the domestic market along with national players. However, it is hardly possible to distinguish an apparent leader in the development field of Uzbekistan. Many players operating in Uzbekistan today have limited resources and thus are seeking joint ventures. The advent of new companies in the real estate market, both Russian and overseas, will foster competitiveness and intensification of the market and contribute to its further boosting.

Relatively low rates of residential construction, coupled with the upturn of housing demand in Tashkent by the population of other regions of Uzbekistan, have become a reason for the special attraction of residential real estate. Professional developers are predominately operating in the segment of the elite residential real estate. However, there is a need for housing facilities for other classes, due to the Uzbekistan population growth and welfare. According to experts, 2008 will see an upswing of offerings at housing primary market and a price bulge of 40-50 percent compared to 2007. At the same time, Uzbekistan strongly needs facilities in various segments of commercial real estate, which are attractive for funds inflow as well.

Currently, Tashkent has five business centers of “A” class with an area totaling to 41,350 square meters, which makes a modest 2.5 percent of all office space in the city. The remaining 97.5 percent suits “B” and “C” class objects, most of which are accommodated in the ground floors of residential and multifunctional buildings erected as far back as in the Soviet period. Thus, the average rental price of office real estate areas increased by 20 percent in 2007.

The country’s shopping real estate stays in the early stage of development. There are two sales outlets per 1,000 Tashkent residents, while the city has just six up-to-date trading centers. In the next five years, experts predict, there will be rapid development of local trading networks and inflow of players from overseas.

Investments in the development and realization of hotels and other facilities of Uzbekistan travel industry prove to be a lucrative accommodation of investments into Uzbekistan’s real estate market, which boasts such treasures of Nature as the Chimgan Mountains.

On the whole, Uzbekistan demonstrates sustainable growth of GDP and foreign trade, sound dynamics in the securities market and a favorable legislation base; these facts in aggregate spur a substantial advancement of investment volumes (including foreign) in the national economy on the whole and in real estate in particular. Basically, the growth of investment demand accounts for Russian and Kazakh investors. The investment boom in the Uzbekistan economy has never been so intense and stable as in recent years, with foreign investments totaling around 30 percent of aggregate investments in the country’s markets. Today, the total volume of direct investments in Uzbekistan economy tops $1 billion. Meanwhile, the advent of corporate grandees such as MTS, Beeline and LUKOIL definitely speaks for the high investment capacity of the republic.

Data from Avesta Investment Group, Economic Review Magazine and Uzbekistan Today Magazine were used in compiling the above summary.