Ministry of Construction and

Urban Development, Mongolia

CONSTRUCTION, REAL ESTATE MARKET DEVELOPMENT

AND INVESTMENT ENVIRONMENT
OF MONGOLIA

MINISTER FOR CONSTRUCTION AND URBAN DEVELOPMENT

2015.04.02

D.TSOGTBAATAR

Ministry of Construction and

Urban Development, Mongolia

CONTENT

1. General Overview
Construction and Housing sector
Real Estate Market Development

2. Challenges
3. Opportunities
Advantages of Mongolia
Legal Environment

4. Cooperation potential
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CONSTRUCTION AND REAL ESTATE

SECTOR

Ministry of Construction and

Urban Development, Mongolia

Share of construction and real

estate sector in GDP (%)

25

80.0

22.4
20.6

21.8

71.1
70.0

19.8

20

17.8

16.6

15

40.0
7.3

60.7

60.0

68.8

63.5
55.7

50.0 46.8

10

Share of construction and real

estate sector in total investment
(%)

7.1

6.8

5.3
2.5

2008

1.6
2009

2.9

5.95.8

5.85.7

3.7

32.8

30.0

23.1

19.5

20.0

12.0

2010

Construction
Mining

2011

2012

Real Estate activities

Source: National Statistical Office, www.1212.mn

2013

0.0

2008

2009

2010
FDI

10.3

8.9

10.0

2011

2012

2013

Construction

Source: National Statistical Office

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Ministry of Construction and

Urban Development, Mongolia

CAPACITY OF THE CONSTRUCTION SECTOR

Construction, capital repair and
maintenances,
(MNT billion)

95,700
people
are
employed
by
5,600
construction enterprises in
Mongolia.
Construction work has been
increased by 4.6 times since
2010,
where
housing
construction accounts for
40.4% of total.

2,500.0
2,146.8
2,000.0

1,500.0
1,034.1
1,000.0
745.0
500.0

Construction and industrial

sector maintained robust
growth of 16.1%, contributing
to countrys GDP growth of
7.8%.

1,845.9

463.0
123.2

741.9

2010

222.2
2011

868.2

336.3

2012

2013

2014

Construction, capital repair and maintenances, total

Of which: Residential building

Source: National Statistical Office

Ministry of Construction and

Urban Development, Mongolia

HOUSING SUPPLY, BY HOUSING TYPES

National
National level
level

Ulaanbaatar
Ulaanbaatar city
city

Residential
apartment
district

Apartment
1%
45%

Serviced house
25%
1%

2%

26%

Single house

133.4 (40%)

Dormitory
Ger-nomadic house
Non living quarters

200 (60%)

Ger district

Total: 794,000 HHs

Total: 333,400 HHs

Out of total 794,000 HHs of Mongolia, 600,000 (75.0%)

and 194,000 (25%) are residing in ger and residential
apartment districts respectively.

Housing need in Ulaanbaatar in upcoming 5 years is

estimated to be 204,700 (40,000 p.a.).

Source: National Statistical Office

Ministry of Construction and

Urban Development, Mongolia

HOUSING TARGET & COMMISSIONED

APARTMENT UNITS
30000

70%

0.61

60%

24744

25000
20000

50%

14564.8

15000

40%

9543.9
10000
9899

30%
20%
21%
10%

28%

0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
MDG target up to 2015
MDG based National Development Strategy target up to 2021

30% of Mongolian population will be provided

with housing in 2015, whereas it will reach
67% in 2021.
Source: Mongolian Parliament Resolution No. 25 (2005), 12, 13 (2008).
PS: Calculation is based on numerical data by the National Statistical Office.

5000

1823.6

0
2010

2011

2012

2013

2014*

Commissioned apartments, houses

Total square meter of the commissioned apartments,
thous.m2
Housing stock, thous.m2

In 2008 and 2014 respectively 5,416 and 24,744

residential units were built, which scaled up housing
supply 2.7 times, whereas making aggregate housing
stock 14.5 mln sqm.
Source: National Statistical Office
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Ministry of Construction and

Urban Development, Mongolia

MORTGAGE LOAN

Amount
Amount of
of mortgage
mortgage loan
loan

Number
Number of
of borrowers
borrowers
70,000

3,000,000.0

2,844,612.614.0%
13.1%

2,500,000.0

12.0%

60,000

10.0%

50,000

8.0%

40,000

6.0%

30,000

4.0%

20,000

2,000,000.0

Number of
borrowers 66,334

1,500,000.0
1,000,000.0

8,199.6
500,000.0

2.0%

0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

10,000
-

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mortgage dept outstanding (mil lion )

MDO as perc entage of GDP(%)

Outstanding
Outstanding mortgage
mortgage loans
loans at
at the
the banks
banks is
is MNT2.8
MNT2.8 trillion,
trillion, which
which account
account for
for 13.1%
13.1% of
of GDP.
GDP.

Residential
Residential mortgage
mortgage loans
loans 88 (1)%
(1)% launched
launched jointly
jointly by
by GoM
GoM and
and BoM
BoM are
are performing
performing at
at normal
normal rate.
rate.
oo Past-due
loans
2.1%
Past-due loans 2.1%
oo Non-performing
Non-performing loans
loans 0.5%
0.5%
Source: bank of Mongolia he
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Ministry of Construction and

Urban Development, Mongolia

PRICE INCREASE OF REAL ESTATE

Price
Price of
of office
office space
space per
per sqm
sqm (MNT),
(MNT), 2003-2015
2003-2015

Housing
Housing price
price per
per sq
sq m
m (MNT),
(MNT), 2004-2014
2004-2014

46,886

50,000
2014

2,200,528

2013

40,000

2,014,389

20,000
2012

1,809,217

2011

23,513

2008

2009

2010

2011

2012

2013

Retail price for office spaces increased 11 folds during the last
10 years.

1,189,650
1,044,624

5,566,000

6,000,000

2007

643,621

2006

593,429

2005

547,657

3,900,000
3,300,000

4,000,000
3,000,000

2,025,000

2,000,000

457,292
500,000

4,700,000

5,000,000

1,000,000429,590

2004

2014 2015*

Rental price

1,255,150

2009
2008

15,000

19,516

27,039

10,000

1,575,623

2010

32,177

30,000

43,607

36,038

1,336,500
668,250

1,000,000

1,500,000

2,000,000

2,500,000
Re tail price

Source: MCUD

Source: Research Division, Master Properties LLC

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CONSTRUCTION OF
INFRASTRUCTURE

Ministry of Construction and

Urban Development, Mongolia

By State Budget:

24

Investment /MNT billion/

Projects /quantity/

Sovereign Bond proceeds of MNT96.6bln funded:

The construction of main utility lines for 10 new residential
districts and 12 ger districts in 2013-2014.
Further policies will be pursued towards opening up opportunities for private sector participation,
increasing utility service tariffs, and generation facilities of utilities under concession scheme.
Source: Ministry of Construction and Urban Development
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Ministry of Construction and

Urban Development, Mongolia

2. Challenges

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Ministry of Construction and

Urban Development, Mongolia

CHALLENGES

1. Softening economic growth country due to declining mining

investment.
2. Contracting resources and opportunities to consistently support
development activities.
3. Declining purchasing power of population.
4. Need for improved construction codes and norms, upscale
construction quality, and strengthen labor safety.
5. Implementation of infrastructure projects.
6. Necessity to improve legal environment.

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Ministry of Construction and

Urban Development, Mongolia

IMPROVING LEGAL FRAMEWORK

Laws and regulations to be newly formulated, revised and

amended :
Law on Land
Construction Law
Urban Redevelopment law
Social Insurance law
Law on Real Estate.

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Ministry of Construction and

Urban Development, Mongolia

3. Opportunities
Advantages of Mongolia
Legal Environment

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Ministry of Construction and

Urban Development, Mongolia

RUSSIA
146.3 million
US$ 14,612

KAZAKSTAN
17.4 million
US$ 13,609

ADVANTAGES OF MONGOLIA

As 2014:
Population
GDP per person

MONGOLIA
3.0 million
US$ 4,056

CHINA
1,368 million
US$ 6,807

KOREA
51.3 million
US$ 25,977

1. Economic growth:
Mongolia experienced GDP growth of
17.5% in 2011.
GDP accounted for USD 11.5 billion in
2014 (at current price),
,
7.8%- .
2. GDP per capita grew 8.7 times from
USD466.8 in 2000 to USD4,056 in
2014.
3. Low taxation rate, stable tax
environment.
4. Attractive legal environment for foreign
investment.
5. Conducive business environment.

JAPAN
127.0 million
US$ 38,633

Source: Population number of the countries from http://en.wikipedia.org, GDP per person data from WB website http://data.worldbank.org
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Ministry of Construction and

Urban Development, Mongolia

MARKET EVALUATION

Mongolia Real Estate Sector is the most

suitable for investing.
Global Property Markets -2014 Predictions
Property Frontiers Investment Agency of
England
Mongolian economic growth based on
natural resources will make good
influence to its Construction sector and
Real Estate transactions and apartment
units will be sold.
Oxford business group Research
organization of England

Real Estate Market is developing very

fast.
M.A.D Investment Solutions Real Estate
Company
The most appropriate time has come
for investing in the Real Estate Sector.
-UMC alpha Real Estate investment
management company

Source: Master properties research company of Mongolia

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Ministry of Construction and

Urban Development, Mongolia

INVESTMENT POTENTIAL

FDI:
1. Acquisition, lease, and sale of real estate;
2. Refurbishment, O&M, and management of existing
buildings and property;
3. Purchase of mortgage backed securities (MBS),
whereby invest in the secondary mortgage market;
4. Investment in property market through investment fund.

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Ministry of Construction and

Urban Development, Mongolia

PROPERTY MANAGEMENT

Two alternatives are envisioned for incorporating a property management company, in order to
reshape real estate market in Mongolia in its classic form :
Driven by private sector;
Centered by the State Housing Corporation (SHC).
Policy interventions are being contemplated to enable the State Housing Corporation to run real
estate business, attract FDIs, facilitate cooperation potentials, and coordinate its activities with
infrastructure projects.

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Ministry of Construction and

Urban Development, Mongolia

Thank you for your attention.

Contact:
Government Building12, Barilgachdiin talbai-3
Ulaanbaatar 15170, Mongolia
Tel: (976)-11-260294, Fax: (976)-11-322904
E-mail: icd@mcud.gov.mn
www.mcud.gov.mn

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