KAZAKHSTAN

Almaty Industrial
Market Snapshot
Fourth Quarter | 2018

Overview
The Almaty logistics market remains resilient despite the persisting
uncertainty of the Kazakhstan economy, political climate, and the
national currency volatility. However, the class A leasing market
had a record-breaking year owing to retail sales growth translated
into increasing demand for quality warehousing space. Indicated in
USD and KZT the annual retail sales volume increased by 13.7%
and 20.3% correspondingly.
As of the end of 2018 Almaty continues to head the list of the most
developed industrial markets across Kazakhstan regions. The city is
recognised as the most important transport, logistics and
distribution hub in the country, serving as an indispensable
transport node along the international transit route between Europe
and Western China.
Demand
Logistics property has continued to outperform other commercial
rd
sectors during Q4 2018. Following an exceptionally strong 3
quarter, leasing activity in class A has held up well in the remainder
of the year. The occupiers’ appetite remained strong throughout Q4
for quality well-located industrial developments with high ceiling and
access to transportation nodes, such as rail, and intermodal
services pushing vacancy rates in such locations close to zero.
The pent-up demand for class A warehousing facilities contributed
to the highest volume of speculative space absorbed during the
year since 2014 pushing the overall vacancy up to 3% across
primary industrial & warehousing developments as of 2018. Class A
Supply
2
The total industrial inventory reached approx. 350,000 m of
quality space with the top 5 industrial and logistics operators
2
in the Almaty region managing almost 310,000 m of
speculative prime industrial and warehousing stock.
Pent-up demand for quality warehousing space is finding an
outlet through speculative development, with a post-financial
2
crisis high 15,000 m of principally B class premises being
under construction as of the end of 2018.
Outlook
Regardless of the national currency volatility, the structural
change driven by recovering retail sales will continue to
benefit the market. An increase in speculative development
is helping to rebalance a market driven by occupiers seeking
to relocate to more quality warehousing space, while pricing
levels recently achieved illustrate developers’ continued
appetite for the sector. Given the tight market conditions
persist, we expect developers to break ground on additional
speculative projects in the mid-term, which will help bring
supply and demand fundamentals closer to balance in prime
development submarket.
MARKET INDICATORS
Market Outlook
Prime Rents: Low vacancy may cause further rentals’ upward
correction in Class A submarket

occupancy has risen by almost 10% over the year, despite an Vacancy: Is expected to be limited in the short-run
2
increase in speculative development with 10,000 m commissioned
during the last 12 months. Supply: The continuing upward trend in retail sales will
trigger development activity in the mid-term so we
expect developers to start construction to rebalance
Backed by increasing retail sales, healthy demand from occupiers the supply and demand
and limited leasing opportunities across class A submarket are Demand: Occupier demand is expected to remain strong
fuelling rent growth with major players continue to command the
most aggressive overall rates. The prime rentals (denominated in Industrial Asking Rents* – December 2018
KZT) in Q4 2018 were adjusted further upwards in respond to the LOGISTICS LOCATION KZT US$ USD
increasing demand for prime industrial space, yet quoted in USD SQ.M SQ.M Q3 Q3
also ticked up despite strengthening USD. MONTH MONTH 2018 2017
Class A 2,006 5.2 4.9 4.1
For class B warehousing space occupational demand remained Class B 1,704 2.6 - 3.2
selective increasing the gap between class A and class B rentals
Vacancy – December 2018
with demand for class A logistic space continue to drive the market.
LOGISTICS LOCATION Q4 Q3 Q3
Retailers continued targeting industrial developments located on the (FIGURES ARE NET, %) 2018 2018 2017
city fringe as local retail distribution hubs considering customer Class A 3.1 3.1 11.3
proximity to be a key factor in determining optimal ship locations.
Class B 7.4 - 10.0
Rentals in such industrial developments may reach the level of class
A rental rates. Location is set to remain key factor affecting demand - rents are based on the KZT/USD rate of 384.2 provided by the National Bank of the
Republic of Kazakhstan as of 31/12/2018, are indicated VAT exclusive, OPEX inclusive
for class B industrial developments. * asking (marketing rents) may deviate from real transaction rents by 10-25% downwards
** weighted average

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