Mongolia a new place to invest in real estate?
When most people think of Mongolia, Genghis Khan is among
the first things that come to mind.  That and cold barren
wasteland containing more livestock than humans.  But now,
Mongolia is becoming known for something else - foreign
investment.
 
Seasoned overseas property investors know the time to
invest in a housing market  is before the rush. This fact
means that some emerging markets may have not quite
developed in terms of infrastructure. When economic
indications show that improvements are on its way coupled
with  demand for housing  investors need to sit up and pay
attention. Profits are made on the purchase price and
buying real estate before the demand can be a rewarding
business.
 
The continuing economic growth in China has finally reached
Mongolia where, the economy grew over 10% in 2004.  Solid
economic growth is expected over the next few years,
especially in the mining industry, which accounted for 12%
of Mongolia's GDP in 2004.
 
The potential for growth over time is great, as the housing
market has not caught up with demand.  Roughly half of the
Mongolians who live in the capital city of Ulan Bator still
live in traditional nomadic dwelling called ger.  And
despite building 3,500 units last year, there is a shortage
of residential units available.
 
Between the influx of foreign personnel and the demands of
the native population, it is unlikely that the housing
market will suffer from oversupply of units anytime soon.
Residential development is not occurring that quickly, and
the market has not become a focus for foreign investment.
And since demand will almost certainly continue to outstrip
development over the next few years, returns on invest will
probably remain solid over that time.
 
Average rental prices are also solid, allowing foreign
investors a quick return on investment properties which
usually generate positive income equal to a considerable
percentage of the total investment.  Luxury developments
rent at about US$900 at the low end and may go as high as
US$4,000.
 
This means that opportunities for foreign investment in and
development of residential units could prove to be
lucrative over the long haul.  And in fact, capital growth
of property prices and strong rental returns has begun to
draw foreign investors from Britain.  The Times newspaper
from the UK  reports that high property costs at home are
encouraging investors to look abroad for better returns on
their investments.  And some of those investors are looking
at countries such as Mongolia.
 
While this particular market may not be for everyone,
investors who have some money they can use for higher-risk
investments may wish to consider the Mongolian housing
market for investing in residential development.  But leave
the goats at home.
 
 
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Nicholas Marr is a lifetime overseas property investor and
CEO of Marr International Ltd a UK based property marketing
company that is responsible for international real estate
 
.