Invescore Property LLC, 2024

• The Challenges

In 2023, the common real challenges that negatively affect the efficiency and ​profitability of real estate companies in Ulaanbaatar were not fundamental indicators ​such as the ability to purchase real estate, the availability of credit and resources, the ​speed of new supply, innovative concepts, and the trend of tenant migration, but were ​systematic problems including:

• Risks caused by violations of planning and standards;
  
• Lack of open data in the industry.
  

Risks arising from violations of planning and standards

Overt cases of non-compliance with city planning, norms, and standards have been a ​common topic of criticism from experts and citizens for many years. However, after ​last year's shortages, dangerous phenomena, natural factors, and accidents, ​enterprises and citizens began to conduct a thorough risk assessment and demand ​responsibility from the appropriate institutions.

In 2023, the damage caused by catastrophic events in the country reached MNT52 ​billion, an increase of 57% from 2022 and 102% from 2021. This includes 1,796 cases of ​damaged homes and apartments and 990 cases of destroyed homes and apartments.

Number of Disasters and Damages reported in 2023

Source: National Statistics Office

Real Estate Insurance Alone is not Sufficient Risk Mitigation

The total assets of Mongolian insurance companies combined are about ₮580 billion, ​and the risk reserve fund is about ₮270 billion. The penetration of the insurance ​industry, or the percentage of total premium income as a share of GDP, is 0.6%.25

However, the construction cost of a class A, one-block office building in a class A city ​location is at least 50 billion ₮. Therefore, managing the risks that may arise in the ​construction and real estate sector only through insurance services and relying on ​their reserves is unrealistic.

To be continued...

Lack of open data

There is a need for more open statistical information and databases regarding ​Mongolia's construction and real estate industry.

Other than the monthly housing price index, a price table of arithmetic average, there ​is almost no actual industry data and background data distributed in a timely, multi-​year series, database format, or segment breakdown. As a result, the development of ​experts, analysts and appraisers specializing exclusively in the construction and real ​estate industry, business services, and investment tools based on their analysis is ​lagging behind.

According to a February 2024 survey of construction project development companies, ​only 30% of businesses were satisfied with open statistics and databases presented ​by government agencies.

Does Open Statistics and Databases meet the needs and Requirements of your Organization for ​Decision Making?

Source: “Identifying Industry Sentiment” survey- Invescore Property, 2024

To be continued...

• Project financing and investment in 2023
  

Available forms of real estate investment in Mongolia

By investing in any project or company, you become ​the "project owner" or "lender to the project." Funds ​withdrawn from project owners are recorded as ​"owners' equity," and funds financed by project ​lenders are recorded as "Liabilities".

Types of project financing and investment opportunities

As of February 2024, there are the following possible tools for raising funds or ​investing in real estate projects in Mongolia. It includes:

To be continued...

• Apartment Sector 2023
  

New Supply

In 2023, 14,578 units of 119 new apartments were commissioned in UB.31 Regarding planning, two and three-room or 1-2 bedroom apartments dominated, accounting for 81% of the total supply.

Data on the total number of Housing Units commissioned in 2023

Source: City Department of Standards and Inspections

To be continued...

• House sector 2023
  

New Supply

As of 2023, a total of more than 7,000 units house projects are being implemented. ​Most of them are located in the southern and eastern regions of the city. The average ​price of the house is ₮4.7 million per sq.m, and the average sales volume of the ​projects receiving orders is 71%.

House Projects in UB, by number of Houses

Source: *raw data provided by Tenkhleg Zuuch LLC

To be continued...

• Featured Market: USA
  

House sector

U.S. home sales are expected to hit their lowest level in 30 years in 2023 due to tight ​monetary policy, higher interest rates, and a reduced supply of new homes.

In 2023, a total of 4 million homes were sold, which is a 19% decrease from the ​previous year. The median home price was around $390,000, and only 16% of the ​home supply was affordable.

Source: National Association of realtors, NAR

To be continued...