What has Changed in the Real Estate Market of Kyrgyzstan in Recent Years? Interview with an Expert

“The cost of a square meter in Bishkek has increased by 49.2% compared to 2022” — this quote clearly illustrates the rapid changes in the real estate market of Kyrgyzstan. In this interview, Commercial Director of the construction company O2 Development, Suerkulov Aidin Akylbekovich, talks about new legislative initiatives in the country, the reasons for the rise in housing and rent prices, as well as the peculiarities of buying real estate by foreigners.

We have a lot of construction companies, but we still can’t keep up with demand.

Current Situation on the Real Estate Market

— The real estate market in Kyrgyzstan is undergoing major changes in 2024. Under the influence of economic, social and demographic factors, there is an increase in prices, changes in the preferences of buyers and investors, and the development of new market segments. The demand for housing is growing, which in turn affects the prices and types of popular real estate. Bishkek remains the leader among Kyrgyz cities in terms of attractiveness for investment.

A new regulation that imposes control over construction companies came into force on January 1, 2024. This document focuses on the safety of purchasing apartments. Here are the key points:

• Mandatory authorized capital has been established for construction companies, depending on the area being built.
• Transparent accounting has been introduced: companies are required to publish quarterly reports on their websites, and all payments must be made only through a bank.
• Contracts now necessarily specify the deadline for commissioning the facility and many other things that are aimed at protecting the buyer from unscrupulous construction companies.

Despite the fact that there are more than 300 construction companies operating in our market, we still do not have time to build enough square meters to meet demand. The huge demand for apartments leads to the fact that their price will only grow in the future. As they say, demand creates supply. Therefore, the best time to buy an apartment was “yesterday”, and now it is “today”.

Demand and Prices for Real Estate

— If we talk about apartments, then one-room and two-room apartments are in the greatest demand. They are the most liquid, and there is always a high demand for them. Commercial premises in areas with developed infrastructure are also popular.

The cost per square meter of apartments in Bishkek in the first 6 months of 2024 increased by 17.6% compared to 2023 and by 49.2% compared to 2022. One-room apartments of the 104 series increased in price by 45.2%, and those of the 105 series by 57.9%.

The cost of a one-room apartment in a new building depends on the type of building (economy, business class, or premium), its location, area and number of floors. The cost is also affected by the stage of construction. For example, prices for apartments at the foundation pit stage are lower.

Let me give you a specific example: the cost of a one-room apartment in a premium-class building in the southern part of the city at the stage of completion of the top floor can reach $70,000. A year ago, a similar apartment at the excavation stage cost $60,000. In a building that is handed over for self-finishing, the cost of apartments will vary from $1,200 per 1 m² depending on the location and class of the building.

In the city of Osh (the second largest settlement in the country), a one-room apartment in a new building can be purchased for up to $40,000, and on the secondary market for a similar price.

Rental Market

— Since our capital is growing and developing every day, this directly affects the growth of internal migration and the influx of citizens from other regions. For example, more Russians have been coming lately. Of course, this contributes to the demand for housing and rent, among other things.

The cost of renting a home depends on the number of rooms, the type of house, its location, and whether it has been renovated. Renting a home in the capital is expected to be more expensive than in the regions. For example, monthly rent for a one-room apartment in a business-class building in the center of Bishkek (with European-quality renovation, household appliances, and furniture) will cost up to 60,000–80,000 soms ($710–$950). In Osh, a similar apartment can be found for 35,000 soms ($415) per month.

As for utilities, I will tell you about local peculiarities concerning heating and hot water. We have gas roof heating, and, say, owners of an apartment of 70 m² will need to count on expenses in the amount of 5000 som ($60).

But every year the heating bill can decrease for two reasons:

• Firstly, initially the house is usually not fully occupied, which means that as the number of residents increases, each apartment will spend less energy on heating.
• Secondly, the residential building itself, or rather its skeleton (monolith), will dry out every year, which directly affects the energy costs for heating the entire building.

There are different options for hot water. You can install gas water heaters, which provide a large volume of hot water. You will get a kind of endless source of it. Or the second option is regular boilers (water heaters). This solution will cost about 1000 soms ($12).

Buying Real Estate in Kyrgyzstan by Foreigners

— Foreigners have the right to purchase real estate in Kyrgyzstan. Most buyers now come to us from Russia, Kazakhstan and China. They are mainly former citizens of Kyrgyzstan or their relatives. Since 2021, citizens of Turkey have become active.

Foreigners mainly own residential premises. The capital's housing market, which accounts for half of the country's construction, is the most popular. The city of Osh is in second place in popularity, and Jalal-Abad is in third.

The procedure for purchasing real estate in Kyrgyzstan for Russians is the same as for local residents. Citizens of other countries will need a notarized translation of their passport, civil registry office documents, consent and other necessary documents to complete the transaction.

Foreigners also have the option of purchasing real estate in installments. Mortgages are currently unavailable to citizens of other countries. But it is worth noting that our State Mortgage Company (GMC) is developing every year. If I am not mistaken, they now have the option of shared construction: you contribute 50% or more of the cost of the apartment, and the rest is given to you in installments for ±10 years. The result is almost like a mortgage.

Real Estate Investments

— The real estate market is attractive to investors, first of all, from the point of view of developing their own business. They are interested in buying and renting commercial premises to open shops, beauty salons, cafés, restaurants, etc.

There are many ways to make money on real estate — from renting out housing, as well as commercial premises for various types of business, to flipping, i.e. reselling properties after renovation.

The amount of earnings varies and directly depends on the type of rent or resale. They, in turn, are affected by the location, type of house, area, number of floors, availability of developed infrastructure and even parking spaces.