Kazakhstan - InfrastructureKazakhstan-Infrastructure
This is a best prospect industry sector for this country. Includes a market overview and trade data.
Overview
Growth in Kazakhstan’s construction market will be considerably higher than in the country’s regional counterparts in Central and
Eastern Europe (CEE) over the coming years, underpinned by the strong project pipeline in the transport and energy sectors.
According to Business Monitor International (BMI), economic diversification schemes, rising oil prices, and external multilateral and Chinese companies will be the decisive factors fueling robust construction sector growth in Kazakhstan over the next five years. Kazakhstan's project pipeline remains relatively well diversified, with energy and utilities, transport, and residential and non-residential construction accounting for 36%, 40%, and 24% of total project value, respectively. The BMI forecasts real growth in Kazakhstan’s construction sector to register a robust 6.2% in 2019, owing to strong activity across the transport sector and ongoing strength in the residential buildings sector. Growth will remain fairly strong going forwards, as the vast pipeline of transport and energy projects is gradually commissioned.
There are residential, office, commercial and multi-functional projects developing in Nur-Sultan, Almaty and Atyrau. In addition, large infrastructure and industrial projects are planned for Western Kazakhstan. Further developments of the industry, improvements in safety, and updates in the quality of construction products are key economic and political tasks of the government. In recent years, economic growth in Kazakhstan had a positive effect on the development of the construction industry.
According BMI, Kazakhstan's construction sector will register strong growth over the next five years, particularly in the transport and residential and non-residential sectors, which will benefit from Chinese investing looking to boost Trans-Eurasian logistics capacity and strong structural demand, respectively. The positive outlook for Kazakhstan's construction sector is also based on the country's ambition to leverage its central geographical location in the context of China's Belt and Road initiative, which proposes to connect European and East Asian markets with strategic investments in road and rail infrastructure throughout Central Asia. This will also result in the country's transport sector outperforming the wider construction market in terms of growth.
External funding from international financial institutions like the Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), and the Islamic Development Bank (IDB) will be integral to fueling growth in the construction and infrastructure industries of Kazakhstan over the next five years. For example, it was announced in April 2019 that the EBRD is considering providing a senior loan of up to USD225mn for the construction of the Almaty ring road in Kazakhstan. Reflecting the country's status as Central Asia's largest infrastructure market, Kazakhstan has attracted and will continue to attract the lion's share of development funding in absolute terms to date. International development institutions are currently financing 32 projects in Kazakhstan, a figure which accounts for 34% of all projects moving forward in the country and exceeds the combined number of projects in the other four Central Asian markets. EBRD is particularly active in financing projects in Kazakhstan, with the institution supporting 17 projects with a cumulative value of USD2.7bn.
There are residential, office, commercial and multi-functional projects developing in Nur-Sultan, Almaty and Atyrau. In addition, large infrastructure and industrial projects are planned for Western Kazakhstan. Currently, the government is implementing a new program that will stabilize the supply of new residential construction – “Affordable Housing-2020” Program.
Leading Sub-Sectors
Less than half of the construction materials used in Kazakhstan are available domestically. Locally produced materials include cement, bricks, wooden doors, windows, steel doors, and soft and iron roofs. A fairly high portion of locally produced materials and products are not considered to be up to international standards. Most other materials are imported, mainly from Turkey, China, Germany and Russia.
There is strong demand for high quality imported products and materials used in the finishing and renovation process, which include: wall & floor coverings, ceiling products, doors and windows, kitchen and bath equipment, plumbing and electrical equipment, hardware, and DIY products. In recent years, output of building products grew between 3 and 30%, depending on the product category.
Domestic production of several new quality and cost competitive basic building products was established. Among these products are fiberglass insulation materials, new types of roofing and waterproofing products, energy efficient glass, aluminum extrusion, engineering equipment, cement, bricks, and wall panels. Imported technologies/equipment significant contribute to the overall improvement in the industry.
Due to government emphasis on import substitution and diversification of industry, many opportunities exist for suppliers of manufacturing machinery and systems as well as suppliers of new technologies. The end-users of these products are quite varied: small- and mid-sized construction and building renovation contractors, large contractors, government agencies and individuals.
Opportunities
Improvement in Kazakhstan’s overall economic situation, growth of the real estate and construction sectors, and the restructuring of the housing industry have stimulated demand for building equipment and materials as well as for architectural, construction and engineering services. There is a growing demand for all types of construction services. For example, construction, renovation, and conservation of industrial and public utilities and residential buildings are all much needed. Also, architectural, design, engineering and assembly services are in demand. In addition, there is a need for a full range of civil engineering, including: research and development, all aspects of design, design and build,
management contracting, and construction management.
While the oil and gas sector will be the major purchaser of architecture, construction, and engineering services for years to come, there is demand for these services in many other sectors. These include construction, renovation, and conservation of residential buildings and industrial and public utilities, as well as design and assembly services. There is a need for the full range of civil engineering, construction, and engineering activities including research and development, all aspects of design, design and build, management contracting, construction management, tunneling and tunnel lining, foundation engineering, mining, and facilities management.
The government is interested in pursuing infrastructure development, including roads renovation and construction in the region. With government plans to invest more than USD4 billion for four major road construction projects, manufacturers of heavy earth moving equipment and road construction equipment might find good opportunities in the market. Another source of financing will be the international financing institutions, such as the World Bank, European Bank for Reconstruction and Development (EBRD), Asian Development Bank (ADB), and Islamic Development Bank (IDB).
Trade Events
KazBuild 2019: 26th Kazakhstan International Building & Interiors Exhibition - 4 - 6 September 2019. Almaty, Kazakhstan. Organized by ITE Group PLC, Iteca LLP
ShymkentBuild 2020: 6th South Kazakhstan International Building & Interiors Exhibition - 11-13 March 2020, Shymkent, Kazakhstan. Organized by ITE Group PLC, Iteca LLP
AtyrauBuild 2020: 19th North Caspian Regional Building and Interiors Exhibition - 8-10 April 2020, Atyrau, Kazakhstan. Organized by ITE Group PLC, Iteca LLP
AstanaBuild 2020: 22st Kazakhstan International Building & Interiors Exhibition – 20-22 May 2020, Nur-Sultan, Kazakhstan. Organized by ITE Group PLC, Iteca LLP
Kazcomak 2019: 16th Kazakhstan International Road and Heavy Construction, Communal Machinery Exhibition - 18-20 September 2019, Almaty, Kazakhstan. Organized by ITE Group PLC, Iteca LLP