Many Kazakhs consider buying an apartment to rent out as the best investment, but according to an expert's calculations, such investments are less profitable than alternatives, reports infohub.kz.
Housing is seen not only as a necessity but also as an investment tool. The most common idea for parking money is the so-called "Kazakh dream": buy an apartment and rent it out, expecting constant price growth. However, independent financial consultant Aman Alimbayev calculated on his Telegram channel how much rental housing actually yields compared to portfolio investment in securities.
At first glance, housing in Kazakhstan appreciates, but accounting for exchange rate differences paints a different picture. At the 2008 peak, a square meter in Almaty cost about $2,600. Today, even with a stronger tenge, it's around $1,650. Eighteen years later, the price is still 37% below the peak. In tenge, the same meter rose 2.5 times, but devaluations ate up the difference. A sharp spike in 2022 was due to a one-time mass withdrawal of pension savings, which will not be repeated.
Even if buying an apartment in 2010 (after the 2008 crash), Kazakhs would have paid $1,600 per square meter, and now the price is $1,650. That is, for more than 15 years, there is almost no growth: a 45 sqm apartment would cost $72,000 both in 2010 and in 2026. Meanwhile, the dollar experienced inflation. Adding rental income improves the picture, but it's still not the most profitable.
The gross yield of long-term rentals in Almaty and Astana today is about 6–8% per annum in tenge – before taxes, vacancies, repairs, and wear and tear. With a base rate of 17%, tenge deposits guaranteed by the Kazakhstan Deposit Insurance Fund (KFD) yield noticeably more – without tenants, repairs, and other associated costs. With high inflation, any appreciation in housing value may be nullified: if annual inflation is 10% and housing prices rise 10%, the real value hasn't changed. Kazakhs would only earn from rent, while the price appreciation would be nearly zero.
After taxes, losses from vacancies, repair costs, and depreciation, an apartment loses on average 20–30% of income. But even then, profit would be positive. Ultimately, an apartment together with net rent would turn $72,000 into roughly $133,000 if rental income is reinvested. For comparison, the same $72,000 invested in the S&P 500 index would grow to $476,000, and with dividend reinvestment, to about $649,000. Thus, the apartment would double the capital, while the index would multiply it 7–9 times. And this is considering that 2010 was nearly an ideal entry point for property; those who bought at the 2008 peak are still in the red.
The return on housing as an investment asset lags behind investing in exchange-traded funds over the long term for the last 16 years, and considering high inflation, also behind bank deposits. It is important to remember that investing also has its risks and should be approached with proper preparation.