Construction industry in Kazakhstan fostered by government-initiated programmes

The construction industry suffered more than most areas of the Kazakh economy as a result of the global financial crisis which hit the country in 2008. Fortunately for builders, the government undertook several measures to support the industry, without which the consequences would have been more severe than the 5% reduction seen in 2009.

One of the most prominent programmes prepared by the government is the State Programme on Forced Industrial-Innovative Development for 2010-2014, the main aim of which is to diversify the economy and increase its competitiveness. The programme calls for the expansion of several sectors, such as chemicals, nuclear and manufacturing, and to this effect, numerous investment projects are being implemented. Within the programme, 227 industrial plants and facilities have already been completed, at a total cost of $6.2bn. In turn, within the Road Map programme, 1,535 social system facilities were renovated in 2009-2010 as well as 2,634 educational facilities, 764 healthcare facilities, 119 sports facilities, and 361 cultural facilities. This led to an 18.6% increase in the value of renovation and reconstruction works in 2010.
However, government support was not sufficient to counterbalance the reduction in volumes of private sector investment. As a result, there was a reduction in the volumes of both residential and non-residential buildings, with housing construction being the most severely affected. The share of residential construction work as a proportion of the total volume of construction output in Kazakhstan fell from 19.3% in 2007 to 5.8% in 2009. In 2010, there was a slight increase in housing construction value, but the figure was still 62% lower than the figure in 2007, when this market area reached its peak. Overall, construction output grew by 1% last year and a similar growth rate was seen in the first half of 2011.

The total value of investment in residential construction decreased by 2% in 2010, though this could be considered mild in comparison with the 41% decline observed in 2009. State support continues to be provided and, coupled with increased volumes of loans, hope of a recovery on the residential construction market in Kazakhstan is strong. In the first half of 2011, the value of capital investment in the sector increased by 24.3%, with almost half of the total investment coming from the Kazakh people. Another positive sign of an ongoing revival on the residential market is that the number of buy/sale transactions has increased substantially, which indicates that demand for housing is back and strong. Housing development will also continue to be supported by the government and substantial amounts have been allocated for this purpose through the 2011-2014 housing construction programme.

This press release is based on information contained in the latest PMR report entitled “Construction sector in Kazakhstan 2011 – Development forecasts for 2011-2013”.