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10 January 2020

Tashkent – new capital of real estate

From Moscow to the capital of Uzbekistan – Tashkent – a little less than 3 thousand km and 4 hours by plane, but we know much less about this Central Asian country than about more distant Thailand and Vietnam, although Tashkent with a population of 2.5 million people is one of the largest cities of the former USSR, second only to Moscow, St. Petersburg and Kiev.

Results of last year show that Uzbekistan entered the top 10 countries with the best business environment improvement, cited the World Bank’s Doing Business report (over 4 years it has managed to rise in the ranking by more than 60 positions).

According to forecasts of the International Monetary Fund, by the end of 2023, Uzbekistan will become the leading country in the region in terms of GDP growth rates.

In addition, international experts also note an increase in investment in Uzbekistan. According to IMF forecasts, by the end of 2023, the share of investments in the structure of GDP will exceed 39%, which will be the maximum indicator for all countries of the former USSR.

In the past few years, large-scale multifunctional development projects have been announced and have already begun to be impltemented in the country, not only in the capital, but also in other cities, for example, Nurafshon and Bukhara.

The first real estate segment, which began to develop rapidly, was the retail market: today in Tashkent there are 8 new and modernized shopping centers, 6 of which were built after 2010, when the construction of new retail facilities began in the city.

Tashkent is still inferior not only to large European megacities, but also to the cities of neighboring Kazakhstan: Almaty (almost 10 times), Astana (almost 15 times) in terms of supply of retail space – for example, еoday, there are only 35 square meters per thousand people.

For the next two years, 5 high-quality shopping centers with a total leasable area of ​​129 thousand square meters are announced for opening in the city at once. If sold, the volume of supply on the market will increase by 160% in 2 years.

The key factors hampering the development of high-quality retail are the consistently low standard of living of the population (the average monthly salary at the time of publication is $ 180) and loyalty to the traditional retail format – bazaars, the price level of which is often lower than in modern formats. At the same time, the consumer model demonstrates a shift in demand towards shopping centers – as evidenced by the high occupancy rate of the latter (the average vacancy level in high-quality facilities is 5%).

This process is supported by important changes in demography: a few years ago, rural residents had a significant preponderance in the structure of the population, while today 51% of the population lives in cities, in addition, there is a tendency to “rejuvenate” the population, which also suggests that new consumers will make other demands on the development of the trade market.

Another growing segment is the hotel development.

Today in Tashkent there are 129 hotels with a total number of rooms of about 6 thousand rooms. Most accommodation facilities belong to mini-hotels and hotels of low price categories.

The quality room stock includes 11 hotels (a total of 1900 rooms, which is approximately 1/3 of the total supply), including both luxury hotels (Hyatt Regency) and international 4-5 star hotels (Radisson Blu, Lotte City, Wyndham, Ramada hotel), as well as hotels of local operators and hotels of the Soviet period, which underwent renovation.

According to the announced plans of investors, by 2021 in the city there will be 8 new high-quality hotels with a total number of rooms of about 1300 rooms (including Tashkent City and Hightech City). Thus, the volume of quality supply will grow by 68%.

The average cost of an overnight stay for a quality hotel is in the range of $103- $179 for mid-range hotels and $218- $333 for high-end hotels.

An important factor in the future development of the market are annually increasing tourist flow, as well as an increase in the length of stay in the city (average is 2.6 days).

The main type of tourism today is business tourism (about 85% of the total amount of overnight stays), in addition, religious tourism is important for Uzbekistan, which is also an important factor in the development of the segment of specialized hotels.

Source: www.pwc.ru