1. Supply/ Demand
Everyone knows that loads of apartments have been commissioned in UB. But how many have actually been delivered? How many are prime, and in city centre locations? The answer, is not so many. Demand comes from continued urbanisation in Mongolia, the reappearance of foreign workers, and a challenging mortgage market leading more people to rent. In great buildings, Mongolians and foreigners are now competing for properties, pushing up rents, leading to better returns. For this very reason, APIP has sold 90% of the Olympic Residence with only a few units remaining.
2. Capital appreciation
Prices are still low. Each new index reveals that the market has not fully recovered, and may now have bottoming out. Foreigners don’t tend to buy, and because the mortgage program hasn’t been resolved, not enough locals are buying. So for now, it’s a rental market. But, if foreign banks start operating in the country, or if salaries rise with the economic recovery, then more people will purchase, driving capital appreciation. Even if prices return to earlier levels- a trend known as mean reversion- then buyers now, can look to ride an upward trend. With a range of incentives on offer for buyers in APIP buildings, purchasers can benefit from further incentives at the bottom of the market.
There’s a settling consensus that Mongolia is recovering. Coal has boomed this year, industrial production is up over 40% and more and more multinationals are investing in the country. The ADB predicts 4% growth this year. The IMF predict 8% by 2019. In a relatively small economy, economic growth often mirrors asset capital growth. With governmental reforms, strong mid-term prospects for copper, and the stock market at record highs, investors who buy now can expect strong upside potential in the coming years.
In a crowded market, projects differentiate themselves by being high specification. We all know Mongolians are attracted to the best design and appearance fusing local traditions and foreign expertise. They’re not the only ones. Expatriates- and their corporate employers- want the highest quality product. Investors are wise to choose developments which are market makers, not market emulators. These will stay ahead of the curve as developers plunge back into the market in the coming years. APIP used international architects on the Olympic, and international consultants including Voodoo and Rive Gauche, to deliver a superior product, new to Mongolia.
5. Strong returns
The combination of low capital values, strong rental demand and a recovering economy, mean real estate presents an unusually lucrative investment. The key is choosing the right schemes. Returns of 9-12% are available in the best developments, but more importantly, residential apartments provide a means at worst to, preserve and enhance wealth, but at best, to mirror the growth rates of the broader economy. Total returns- taking account of rents and values- are likely to exceed conventional investments available to sophisticated investors in UB. We’ve seen significant uplift in values in the secondary market for the Olympic Residence already, and this is even prior to practical completion.
If you'd like to learn more, please feel free to get in touch with us and currently we're offering 12% guaranteed yield investment in one of our projects. You can download the investment material below.