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Kazakhstan: the tale of Nurly Zhol

In November 2014, Kazakhstan’s President Nursultan Nazarbayev announced he would give a State of the Nation address to the Kazakh people – the second of the year. These addresses usually come around less than once a year, so the fact the President was delivering such an address just 10 months after his last one hinted at something big. 

And big it was. He announced a major new programme – Nurly Zhol, a $9 billion nationwide plan to thrust Kazakhstan’s economy into the future. Nurly Zhol would see oceans of government cash flood into many areas of Kazakhstan’s economy.

This money was intended to fund, and has funded, development, construction and projects in seven areas, all of them bringing opportunities for international business to get involved in Kazakhstan. Two and a half years after the programme was announced, we look what Nurly Zhol has achieved so far – and what is still to come.


Housing infrastructure 

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Like the rest of the former Soviet Union, the housing stock of Kazakhstan had seen a lack of investment in the 1990s, as governments navigated the choppy early waters of independence and put the focus on developing the lucrative energy industries. But by the turn of the millennium and the decade after that, it was clear that Kazakhstan needed serious work on its housing – not just building more, but building better. To this end, Nurly Zhol, and a separate programme that focuses on housebuilding called Nurly Zher, has ploughed around 472 billion tenge ($1.5 billion) into building hundreds of thousands of apartment buildings and individual houses to ease the housing backlog, which stands at well over 2.3 million.

The numbers involved are huge. Within Nurly Zher, 664,000 10-acre sites have been set aside as sites for new apartment blocks. 35,000 units will be for rent, while 280,000 apartments will be available to buy via the Kazakhstan Mortgage Company and Kazakhstan House Construction Savings Bank. 521,000 apartments will be set aside for private mortgage lenders. A key component of this is subsidised mortgages, which are being rolled out on a large scale this year. This is helping the population afford the new houses and ensuring a pool of customers for building and interior products.

As a result of the two programmes, one and a half million Kazakhs will get new houses. This would increase the amount of housing in Kazakhstan by 17%. This addition is huge. To give an idea of the scale, increasing housing in Germany by the same ratio would require 6 million dwellings to be built. 

Since the programme was announced the work has been pretty much constant, and is continuing into 2017. This is being reflected in the official housing construction figures that Kazakhstan’s statisticians release each year – more houses were built in 2016 than in any year since the collapse of the Soviet Union.

For suppliers of products, machinery and interior finishes in the building sector, the plan is a goldmine. Not only are there a huge amount of houses being built every year that require complete interior fit-outs, the production side of Kazakhstan’s construction sector – ie, the staple building materials the country produces itself – is highly dependent on imported machinery and production lines.


Modernisation of public utilities, heating and supply networks



Kazakhstan has a way to go before it reaches global energy efficiency standards. It emits 600 grams of carbon dioxide per $1 of GDP generated, which is three times the EU average. So more efficient equipment from abroad is in great demand to reduce this – and HVAC equipment, heating, hot and cold water and utilities networks are a vital part of Nurly Zhol. 

The initial announcement for Nurly Zhol assigned $540 million for HVAC and utilities upgrades. This has funded projects all over the country, including 99 separate projects to develop municipal heating and electricity infrastructure last year alone.

Part of the plan, and of the separate, housing-focused plan of Nurly Zher, involves an initiative to promote small–scale house building, with the government providing the utilities equipment and connection for the houses. 50 billion tenge ($160 million) has been assigned to this in 2017, and work is underway on laying utilities right now in many regions of Kazakhstan. 

This kind of centralised system needs good-quality HVAC equipment, so Nurly Zhol and its sister Nurly Zher both provide excellent opportunities for suppliers of pipes, valves and other equipment for HVAC supply to buildings. Not only that, the Nurly Zhol and Nurly Zher projects will pilot a new way of working in Kazakhstan – using one general contractor to build many houses according to a single architectural plan. This takes the process closer to international norms, making it easier for suppliers to get a foothold in the supply chain.


Transport and Logistics Infrastructure


With Kazakhstan occupying such a prime spot on the Eurasian landmass, boosting the transport infrastructure of this enormous country is of vital importance. Developments in this area include $20 billion to build roads and railways between now and 2020, and – this is the exciting part for the building industry – a ‘New Dubai’. This is the Khorgos-East Gate project.

Located near the Chinese border, the 57 million square metre Khorgos-East Gate will be the logistics hub of eastern Kazakhstan – an integrated centre for manufacture, export, import and storage. Below is a video tour of the proposed facility.



This strand of Nurly Zhol operates hand in hand with China’s world-famous One Belt, One Road policy – after all, Kazakhstan is the buckle of the belt. China-Kazakhstan freight levels have exploded in recent years, and large-scale transport infrastructure development on their shared border is expected to swell transport flows further still.



Energy infrastructure


Energy – particularly oil and gas – is what has driven Kazakhstan’s remarkable economic growth, so Nurly Zhol doesn’t neglect it. The programme funds the electrical power sector in particular, building a number of high-voltage lines to smooth out the country’s power supply.



Social infrastructure


This is more of interest for the global construction and building materials world. Nurly Zhol places a big focus on schools – Kazakhstan has a shortage of kindergarten and school places as well as a shortage of housing – so 20 billion tenge ($63 million) has been assigned to Nurly Zhol to remedy this. As a result, 52 educational facilities were paid for by the programme in 2016, split into 35 schools and 17 kindergartens.
 

Industrial Infrastructure


Special economic zones like Khorgos-East Gate and others around the country also fall within Nurly Zhol. Kazakhstan’s refinery sector is a focus area, with a potential fourth refinery for the country and extensive repair work on the existing three.
 

Support for business


Finally, enterprise support is a smaller but just as important part of the programme – a well-functioning private sector in Kazakhstan puts more money into its economy and makes sure more Kazakhs can afford the housing that Nurly Zhol is paying for. Over $800 million of loans have been made available for SMEs to nudge their contribution to Kazakhstan’s economy towards the 50% mark.


Meet the people in charge of spending Nurly Zhol money


With Nurly Zhol showering Kazahkstan’s construction and HVAC sectors with cash, international brands can’t afford to miss out.  ITE Build & Interiors organise annual trade events that specialise in connecting foreign brands with Kazakhstani construction sector professionals. See below for an event that could interest you:

Kazbuild 2017, for the building and interiors market (5 – 8 September, Almaty, Kazakhstan). Find out more

Aquatherm Almaty 2017, for heating, ventilation, air conditioning and utilities equipment (5 – 8 September, Almaty, Kazakhstan). Find out more

AstanaBuild/WorldBuild Astana 2018, for the building and interiors market in the Kazakh capital (16 – 18 May 2018, Astana, Kazakhstan). Find out more

Shymkent Build 2018, for the building and interiors market in southern Kazakhstan (13 – 15 March 2018, Shymkent, Kazakhstan). Find out more

Atyrau Build/WorldBuild Atyrau 2018, for the building and interiors market in western Kazakhstan (10 – 12 April 2018, Atyrau, Kazakhstan). Find out more
 

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