Last updated August 12th, 2021.
Why invest in Kazakhstan? The short answer is: it’s an undiscovered gem, with fair valuations, in high-growth Central Asia.
During the 2020s, global investors will look at Asian markets more than ever. It’s no secret that the Asia-Pacific region is growing faster than just about anywhere else on the planet.
Most people consider investing in the usual targets first: China, Thailand, Japan and the rest of Asia’s large economies.
Of course, there’s nothing inherently wrong with these countries. Yet their property and stock markets are now flooded with foreign capital and aren’t exactly unknown.
Many of the “no-brainer” investment opportunities that once existed in such places have come and gone. Let’s face it: you’re not truly exploring new investment frontiers if Goldman Sachs and Citibank already have branches there.
You may see higher appreciation and yields through buying real estate in markets like Kazakhstan where everyone else isn’t already going.
Here’s why you might want to invest in Kazakhstan, specifically either its largest city of Almaty or capital of Astana, instead of the typical destinations.
Why Should You Invest in Kazakhstan?
A nation of 18 million people, and the world’s ninth largest in terms of land area, Kazakhstan is Central Asia’s most powerful economy by far.
Kazakhstan was previously was a member state of the USSR, and they’ve arguably become the region’s biggest success story since the Soviet Union’s collapse in 1991.
In fact, Kazakhstan boasts a GDP per capita which is almost on par with Russia’s.
But they aren’t exactly a bastion of liberty. President Nazarbayev has ruled over Kazakhstan’s one-party political system for more than three decades.
Places like Singapore (and indeed Kazakhstan) are proof that lack of personal freedom doesn’t necessarily make somewhere bad to invest though. Look at the Heritage Foundation Economic Freedom Index and you’ll find barely any relation between democracies and free economies.
Vast oil reserves, pro-investment policies, and a strategic position on the map should lead to a bright future. Regardless, we think Kazakhstan’s location is their greatest asset.
That’s because Chinese-backed businesses alongside Kazakhstan’s government are financing billions of dollars’ worth of infrastructure in nearby countries. New railways, ports, roads, and other projects are popping up all over Asia.
Many of these projects are created through China’s New Silk Road, also known as the One Belt One Road (OBOR) Initiative.
Beijing’s goal is creating a modern version of its historic Silk Road from centuries past. They’re creating better methods of moving materials, labor, and products across Eurasia. The OBOR initiative will eventually stretch all the way from Mongolia to France.
The New Silk Road will provide obvious economic benefits. Yet China’s soft power will also rise since they’ll operate crucial infrastructure around the world. After all, you’re more likely to ally with people who own your railways and roads in the event of an armed conflict.
Looking at a map makes Kazakhstan’s geographic importance clear. It has a few powerful neighbors, plentiful oil reserves, and is a gateway to the Caspian Sea.
How does this relate to investing in Kazakhstan? Well, you’ll notice that moving between China and Europe is difficult without traveling through Kazakhstan.
Land routes that don’t involve Kazakhstan mean one of two things: traveling through the volatile Middle East or detouring across much of Siberia.
Either way, China’s New Silk Road is impractical without Kazakhstan. This should equal lots of investment, new infrastructure, and favorable terms for Kazakhstan which should propel the nation’s economy.
How to Buy Kazakhstan Property and Stocks
You have several options for investing in Kazakhstan’s stock and real estate markets. However, they all require visiting the country first.
Foreign individuals can only buy property in Kazakhstan if they’re a permanent resident, which is a difficult status to obtain.
In contrast, foreign companies can directly own property with less hassle. It’s usually easier to form a company and purchase real estate through its name instead of applying for residency.
Buying property in Kazakhstan is fairly valued once you jump through the hurdles. You can own centrally-located real estate in the nation’s largest city of Almaty for under US$1,500 per square meter.
That’s an extremely low price for an upper-middle income economy.
Kazakhstan’s stock exchange is sizable with over 130 listed firms and a market capitalization of US$42 billion. With that said, you’ll need to hop on a plane to open a brokerage account.
As of yet, there aren’t any methods to open a brokerage account or trade stocks in Kazakhstan without making a visit here.
You can buy an apartment in central Almaty for only about US$1,000 per square meter… if you meet the foreign purchasing criteria by either becoming a permanent resident or incorporating a business in Kazakhstan.
Starting a Company in Kazakhstan
It’s possible to start company in Kazakhstan as a foreigner. Perhaps even more notable is that you can own property through a locally-incorporated business, even if you aren’t a permanent resident.
You must have a legitimate, fully functioning business if you’re using it to buy property in Kazakhstan though. Forming a holding company with a sole purpose of owning local real estate won’t work.
Foreigners can own 100% of a Kazakhstan LLC (Limited Liability Corporation). Most global firms do business in the oil & gas, manufacturing, tourism, and tech industries. Companies investing in “strategic sectors”, which all those industries are part of, receive generous tax incentives too.
Investing in Kazakhstan is currently difficult. But barriers to entry are a positive thing if you can break through them.
Kazakhstan’s stock and real estate markets enjoy clear potential and isn’t flooded with foreign money yet. Now is a great time to put forth some effort and enter the local market if you’re willing.
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