Loading ...Market of Office Areas
The growth of business activity in Kazakhstan has increased the demand for the commercial real estate several times for the last 5-7 years. For example, in Almaty the quantity of the active enterprises has grown by 90 % form 2000 to January, 2007 . Office real estate is one of the most attractive objects for investment, which outraces the residential real estate according to revenue level (20 %) and times of recovery of outlay (4-5 years), today. Principal reasons of demand on the commercial real estate, which is in accordance with the conditions of a high class premises and proper level of provided services have been as follows:
- The program of support of small and medium business;
- Establishment of the financial centre in Almaty;
- Appearance of a considerable quantity of the foreign companies in the market;
- Development of a bank branch network of bank.
Development of the services sector, is the important factor, which shapes development of the market of office areas. In particular, banks and the companies rendering business services (legal, consulting and auditor firms, etc.) make a numerous category of users of qualitative office buildings.
According to analysts’ estimations, unmet demand for the commercial real estate in Almaty has made about 100-150 thousand sq. m at the end of 2006. Owing to lack of commercial premises the large companies began to order constructions of their own business centres, thus, their expenses decreased in 1,5 - 2 times. For example, such companies as K’Cell and CenterCredit Bank. Mismatch between supply and demand in the office real estate market has been a reason of the rent cost overestimation per 1 sq. m of such an area. Now, Almaty is one of the most expensive cities for lessees of offices along with London, Paris and Moscow.
In 2006-2007, A and B class areas of BCs (Business centers) were of the greatest demand, they made about 75 % from total quantity of the areas used. Several BCs of such level: Kablan, Pioneer-2, Pioneer-3, Old Square, SAT, Ala Tau, Nurly Tau, the Grand Asia have been set in operation. BCs premises of C and D classes with space from 40 to 100 sq.m. with rent cost 20-35$/sq.m. per month approximately, and BCs areas of A and B class from 90 to 150 sq.m. with rent cost 45-60$/sq.m. per month approximately, were the most demanded. The average level of the vacant areas in the city did not exceed 15 %.
At the beginning of 2008, there were 20 business centres being built in Almaty. Financing difficulties, rise of building costs of the commercial real estate objects influenced the rates of the market development in this segment of the real estate. According to different estimations the date of setting in operation of offices and trading areas can be shifted for 1-2 years. The peak of offers in the office area market is expected in 2009-2010, and they will increase practically twice, in comparison with 2006. The first blocks, of such complexes as the Almaty Financial Center (81,000 sq.m.), Esentai Park (19,500 sq.m.), Rakhat Towers (46,200 sq.m.), Baiterek (18,000 sq.m.) will be set in operation in 2008. Additionally, number of other large projects have been implemented. Increase of the commercial real estate class rating by means of reconstruction has become the new tendency of last years. In Almaty out of 100% of real estate areas 35% are the modernised office buildings build in the Soviet period. About 100 000 sq.m. can be introduced in the market by means of reconstruction. The rent rates is possible to be corrected due to the market saturation and competition increase among lessors.
Irrespective of the fact, that the demand for the office premises annually increases not less than 20 %, according to expert estimations in Almaty, it is supposed, that basically the demand will be satisfied by the B class BCs’ and by the qualitative representatives of C class segment. The demand for A category has decreased. It is explained by appearing of considerable quantity of BC A class and modern B and B+ class buildings.
In B and C classes of BCs the positive dynamics of demand will continue, however, it is expected that the part of lessees will “flow” to BC of higher class, as a result, of poor quality and absence of modern conceptual decisions in the segment, gradually. B class has the greatest prospect of the further development, characterized by the presence of the reasonable price, basic qualitative characteristics.
During last years the three class standards of office premises quality accepted in world practice were not considered much in the Kazakhstan market of office real estate. According to the classifications presented by the American developers, there are a lot of offices mismatching quality of A, B, C classifications in Kazakhstan. Classification of BC in Kazakhstan used to be established by each developer on the basis of its own judgements and representations. At present, the market participants in order to meet the demand of lessees for high-quality office premises have begun to use the high technologies of designing, building and management of the real estate objects, actively. The requirements on qualitative characteristics of the build objects of the real estate, such as the class of offices, their sites, technical equipment, space-planning decisions, architectural features and design, use of ecologically friendly materials, and availability of sufficient number of underground parking places have increased.
Trading and Entertaining Areas
The market of shopping centres has developed slowly, enough, until recently. Improvement of social and economic positions of the urban population and the growth of Almaty city the population makes businessmen to create new trading and entertaining units. At present, there are about 50 shopping centres in the city. Distinctive feature of this segment is building of large trading units of new formats. Additionally, reconstruction of market places is widely adopted.
In general, many existing shopping centres do not possess enough professionalism. There have been made many planning mistakes during their costruction and their lessees in most cases are private businessmen, but, not the professional trading operators. However it is necessary to take into account, that the market is at its initial stage of the development. As the result, the shopping centres of the first generation exist only in Almaty and Astana. In other cities of RK shopping centres remind market places where the local traders dominate also there are some chain operators in them, but their quantity, obviously, is not significant.
The major factors of the rent pricing in this segment are following: location, attractiveness of the trade mark or of a unit; service qualitative characteristics. In the nearest future the outlined tendencies in this segment will be preserved, and will spread widely. It is expected, that additional trading areas of various size and location will be set in operation.
Hotels
The hotel market in Kazakhstan has not been developed sufficiently, yet. In many hotels the accommodation is expensive, and the quality of the services provided does not meet the clients’ expectations. Kazakhstan lacks three-four-five-stars hotels, though, this situation can change with the arrival of the well-known international brands. The joint project of Ascott Group International Hotel Network and Tsesna Corporation is one of examples of the hotel complexes building on the territory of Kazakhstan. It includes construction of two hotel complexes in Astana and Aktau. The Ascott Astana Complex of 200 suits will be built on the left coast of the capital, and it will be set in operation in the first half of 2009. Citadines of 120 suits located in Aktau is to be set in operation in first half of 2008.
Foreign businessmen and diplomats expressed the opinion, that the quantity of the hotels being now constructedin is excessive for Almaty. Four or five large hotels is enough for the city, they can work effectively, but seven or nine of them is obviously much. There may be problems with sufficient quantity of clients and with the quality of service.
There are more than 30 hotels of various service levels and over 50 complexes of short-term placing today in Almaty. Leased apartments and cottages are the basic competitors of hotels. The branch pricing process is influenced by the following factors: the location; the class of finish, the level of service, etc. Proceeding from the factors mentioned above, the average price corridor is as follows: a hotel accommodation - from 45 to 400 dollars per day; an apartment , rooms rent owned by private persons - from 50 to 300 per day.