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Krihaat Glass Hill,
Thailand |
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Al Noor development,
Ras Al Khaimah |
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Al Sanaa Development,
Ras Al Khaimah |
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Central Asia Faces the Global Credit Crunch |
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HOME >> NEWS >> Central Asia Faces the Global Credit Crunch |
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 Despite exhortations from a variety of pundits pitching Kazakhstan as the next big boom market, the fact is that a growing number of analysts are looking at the market and seeing not boom times, but a potential bust.
The credit shortage is beginning to take it’s toll and there is an ever-growing number of properties doing nothing but sitting in an estate agent’s window gathering dust, as it were.
Kazakhstan, like much of the rest of the world is beginning to come to grips with the fact that a major boom is inevitably followed by a slow down or bust at some point. The country’s economic performance over the last decade has been spectacular – 10% GDP growth year on year until 2007, when it slowed to 8.7%, with predictions of a further slowdown to less than 6% in 2008.
Kazakhstan, like it’s neighbors - Uzbekistan, Tajikistan Turkemenistan and Krgyzstan was unprepared for the challenges of independence from the Soviet Union. These five Asian republics became independent in 1991 – almost without warning. None of them with a clearly defined national policy and taken almost completely unawares by the massive influx of foreign investors and, truth be told – cheap money.
Kazakh real estate, once seen as the “Jewel in Asia’s crown,” saw price increases of as much as 30% pa until the end of 2007, fueled by speculators and a seemingly never ending supply of money. Then came the US sub prime crisis and, like the UK and USA, prices began to fall rather than rise, dropping by between 0.6% and 2.4% in December. No longer were properties flying out the door before they had even been listed.
Combine this with issues of a poor infrastructure and inflation of as much as 20% per annum and you have a recipe for disaster. The sudden drying up of cash for property builders and speculators to play with may actually turn out to be a good thing in the long run. Slowing down an unsustainable growth pattern before it reaches critical mass.
As with other areas of the world who have experienced huge growth in the property sector, much of the development in Kazakhstan has been in the luxury end of the market and the wake up call has arrived. Being left with a substantial inventory of high end properties that no one can afford may persuade the government to step in and perhaps take a more holistic view of the property market.
In the meantime, if you are in the market for a collection of half finished luxury condominium developments, we know where to look.
Source: http://www.overseaspropertymall.com/ |
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