Mongolia seeks S’pore expertise in construct


VAST but sparsely populated Mongolia is wooing Singapore investors as the country awakens its sleeping giant – the construction and real estate sector.

The landlocked country, about the size of Alaska, is home to more than 2.8 million people, with nearly 40 per cent in the capital Ulaanbaatar.

Robust demand for affordable and luxury housing surpasses supply. Only 25 per cent of Mongolians live in residential apartments. The rest live in traditional nomadic “Ger” districts.

Mongolian Minister for Construction and Urban Development Tsogtbaatar Damdin said the nation aims to attract Singaporean investment and expertise, as the capital undergoes rapid urbanisation to accommodate its urban population. He was addressing Mongolian and Singaporean representatives from the sector at a roundtablemeeting held at the Lee Kuan Yew School of Public Policy yesterday. He viewed the oft-overlooked real estate and construction sector as the economy’s “shock absorber”, given the cyclical nature of the country’s mining sector.

Mr Damdin said the construction sector is clearly market-driven. Even though the government began focusing on this sector only in 2013, construction work has increased by 2.5 times from 2010 to 2012. Investors should also consider Mongolia’s rapid and sustained growth, coupled with politico-economic stability, he added.

However, he listed various challenges, namely a contraction of resources needed to support urbanisation. One Mongolian representative also said harsh winters restrict construction to the March to October period.

Yet, these issues have not prevented the sector from thriving.

Mongolia’s industry representatives noted that the country’s first real estate investment trust is under way. The Mongolian National Construction Association has also raised over US$15.2 million (S$20.6 million) for sector developments, and intends to list on the Singapore Exchange.

Mr Mark Lee, director at Singapore-based Wellspring Investments, expects his firm to do well when it launches its first Mongolian development in June, even as the tugrik’s depreciation reduces residents’ purchasing power.

Mr. Andrew McGregor, chief financial officer of Mongolia-based Asia Pacific Investment Partners, urged investors to act fast. “In my mind, the recent exchange rate weakness presents a really good buying opportunity for foreigners.”

The majority of Mongolians live in traditional nomadic “Ger” dwellings (above), circular structures lined with layers of felt and canvas. At present, only 25 per cent of the population live in apartments.

SOURCE: Singapore Press Holdings Limited