The real estate market is highly focused on the capital city, Ulaanbaatar, which 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.
Ulaanbaatar’s inhabitants account for approximately 46% of Mongolia’s population of 2.8m. Forecasts indicate that by 2020 this will grow to 54%, representing about 1.5m. Mountains either side of the city restrict where the expanded population can live.
Key drivers and supply constraints in Ulaanbaatar’s real estate market include the following:
Mongolia’s economy is forecast by the IMF to grow 14% yearly through to 2016, underpinned by a thriving mining industry and China’s increased demand for coal.
With the expansion of the mining and financial services industries, including the country’s insurance and lending sectors, the demand for high quality Grade A and B office space is expected to grow substantially.
As more and more international brands consider entering the Mongolian market to capture demand from the increasingly affluent population, it is those retail scheme that are well designed and strategically positioned that will benefit from full occupancies and will set market rental levels.
All of the positive macroeconomic dynamics have led to unique investment opportunities, in terms of high rental yields and strong capital appreciation. Mongolian real estate is likely to feature higher rental growth, land values and sale prices for the next five years. Click here to view the latest forecast for the Mongolian real estate market, generated by our dedicated research team.
Mongolian real estate is proving to be an attractive portfolio diversifier for a growing number of private and institutional investors worldwide. This is an incredibly exciting time to be entering the market that offers rare first-mover advantages.