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“Nurly Zher” State Program for Housing Construction

Upon the Resolution No. 372 of the Government of the Republic of Kazakhstan dated June 22, 2018 “Nurly Zher” State Program for Housing Construction (hereinafter referred to as the Program) was approved, combining new housing construction support mechanisms and operating under the previously adopted state and industry-based programs: “Nurly Zhol” State Infrastructural Development Program for 2015-2019, the Regional Development Program until 2020.

The goal of the Program is the increase in the affordability of housing for the public.

To achieve this goal, “Baiterek” NMH” JSC, as a part of “Nurly Zher” State Program, is a single operator and participates in the implementation of the following program areas:

1) financing of the construction of LEA leveraged housing through the mechanism of LEA’s bonds redemption;

2) increasing the affordability of mortgage lending;

3) promoting construction activities by private developers;

4) completion of housing construction within the previously adopted programs (Nurly Zhol, RDP-2020);

5) support for shared housing construction.

Program Summary

Title of the Program

“Nurly Zher” State Program for Housing Construction

Basis for the Development

The forecasting scheme for the territorial-regional development of the country until 2020, approved by the Decree No. 118 of the President of the Republic of Kazakhstan dated July 21, 2011;

Strategic Development Plan of the Republic of Kazakhstan until 2025;

Clause 3.11 of the Minutes of the Extended Meeting No. 01-7.8 (ПӘ) of the Government of the Republic of Kazakhstan dated September 9, 2016 involving the participation of the President of the Republic of Kazakhstan;

"Nurly Zhol - the Way to the Future" Address of the President of the Republic of Kazakhstan to the People of Kazakhstan dated November 11, 2014;

“New Development Opportunities in the Conditions of the Fourth Industrial Revolution” Address of the President of the Republic of Kazakhstan to the People of Kazakhstan dated January 10, 2018;

Instruction of the Head of State dated March 5, 2018 in “Five Social Initiatives of the President” Address to the People of Kazakhstan

Government authority responsible for the Program development

Ministry of Industry and Infrastructural Development of the Republic of Kazakhstan

Government authorities and organizations responsible for the Program implementation

Central government and local executive authorities, quasi-public sector entities

Goal of the Program

Increase in housing affordability for the public

Objectives of the Program

Objective 1. Construction of rental housing without the right of redemption

Objective 2. Construction of leveraged housing.

Objective 3. Development of individual housing construction

Objective 4. Promotion of housing construction by private developers

Objective 5. Construction of housing along with the involvement of quasi-public sector entities

Implementation period

2017 – 2021

Target indicators

Indicator

2016 (evaluation)

2017

2018

2019

2020

2021

Source of the information

Entities responsible for the achievement

Quantity of housing commissioning at the expense of the financing sources, thous. sq. m.*, including:

9619

10116

12097

13065

14110

15239

Official statistical data

MIID, local executive authorities of oblasts, Nur-Sultan, Almaty and Shymkent, “Baiterek” NMH” JSC, “Samruk-Qazyna” NWF JSC

Multi-apartment housing

4825

5116

6991

7550

8154

8806

Individual housing

4322

5000

5106

5515

5956

6433

*These indicators are adjusted based on the financing volumes for the corresponding fiscal years

Financing sources and volumes

Financial costs for the implementation of the Program are provided at the expense of the national budget, as well as private investments, including quasi-public sector entities.

The financing volumes for the Program are as follows:

bln KZT


2017

2018

2019

2020

2021

Total

NB*

127,6

148,6

289,8

279,8

282, 7

1128,5

Extrabudgetary funds**

43,1

120,9

129,4

101,2

109,6

504,2

Overall

170,7

269,5

419,2

381

392,3

1632,7


Program Implementation

Information on the Progress of  NURLY ZHER STATE PROGRAM  Implementation as of September 2019 


1) LEA’s bonds redemption for the leveraged housing construction 

Since 2017, “Baiterek” NMH” JSC has completely switched to market mechanisms from direct financing of housing construction to financing only through the LEA’s bonds of redemption.

The operator of this area is “Baiterek Development” JSC. All the financial resources, as well as the functions for projects selection, identification of developers, disbursement and monitoring of the construction progress were transferred to the LEA.

Financing of the leveraged housing construction through the mechanism of LEA’s bonds redemption allows placing funds for circulation on a “revolving” basis every 2 years and re-direct them to new construction without additional allocation of resources.

At the same time, LEAs are financing the construction and sale of the constructed housing at fixed prices of up to 180 thous. tenge per 1 m2 in Nur-Sultan, Almaty, Shymkent, Atyrau, Aqtau, and up to 140 thous. tenge per 1 m2 in other regions.

The plan for 2019 is 108.8 billion tenge, including bonds borrowed at the amount of 87.4 billion tenge as of today. The remaining bonds of 21.4 billion tenge will be redeemed during the current year as LEA’s orders are issued.

Reference: As of today, LEA's bonds at the amount of 295,5 bln. tenge have been redeemed, including:
- 38.2 billion tenge were redeemed in 2016 with a plan of 38.2 billion tenge;
- 71.9 billion tenge were redeemed in 2017 with a plan of 71.9 billion tenge;
- 98 billion tenge were redeemed in 2018 with a plan of 98 billion tenge;
- 87.4 billion tenge were redeemed in 2019 as of today, with a plan of 108.8 billion tenge.

According to “Nurly Zher” State Program, BD JSC planned to allocate 20 billion tenge through Yelorda Qurylys Kompaniyasy LLP to complete the problematic shared construction projects in Nur-Sultan in 2018. In fact, in 2018, 20 billion tenge or 100% of the plan were allocated. The plan for 2019 was 20 billion tenge, which will be disbursed within 3-4 quarters. As of today, contracts for a total amount of 46.3 billion tenge have been signed, including the share of of Yelorda Qurylys Kompaniyasy LLP constituting 27.1 billion tenge, 3.4 billion tenge out of which have been disbursed under the Acts of Completion.

2) Lending to depositors of the “Housing Construction Savings Bank of Kazakhstan” JSC 

HCSBK JSC is stimulating the demand and sale of the constructed housing by LEA for its depositors through issuing soft loans for housing. Today, there are 1,437 million contracts with the amount of savings of 705.7 billion tenge in the system of HCSBK JSC.

The plan for 2019 is 322 billion tenge. As of today, 31.5 thousand loans worth 333 billion tenge have been issued, including 4.6 thousand loans worth 36.5 billion tenge issued within “Nurly Zher” State Program (excluding Baqytty Otbasy).

Reference: Over the entire period of HCSBK JSC activities (since 2005), more than 204 thousand loans worth 1.47 trillion have been issued, including 17.6 thousand loans worth 133 billion tenge issued within “Nurly Zher” State Program for the period of 2016-2019.

In 2017 – 2018, budget loans of 47 billion tenge were provided from the NB, 100% was disbursed. In March 2019, a budget loan of 28 billion tenge was granted, 17.76 billion tenge was disbursed, the remaining funds will be spent before the end of this year according to the approved FFS.

Baqqyty Otbasy through the HCSBK 

Starting since July 16, 2019, HCSBK JSC has launched a special program of “Baqytty Otbasy”, which became a part of “Nurly Zher” State Program (amendments to the Resolution of the Government of the RoK were introduced on 29.04.19).

Reference: According to the MIID of the RoK, there are a total of 38 thousand large families in the country, which have been registered on the waiting lists for LEA.

For these purposes, it is planned to allocate 150 billion tenge from the NB (at 0.01% per annum for a period of 25 years) - annually within 3 years at 50 billion tenge per year, starting since 2019. Over 25 years, 3 circulations will be completed, and 53.9 thousand soft loans will be issued.      
• приобретение жилья на первичном и вторичном рынках;
• loan rate - 2% per annum for up to 20 years
• down payment - 10% and above with the possibility of using housing certificates
• loan amount - up to 15 million tenge in the cities of Nur-Sultan, Almaty, Shymkent, Atyrau, Aqtau, up to 10 million tenge in other regions;
• acquisition of housing in the primary and secondary markets;

For instance, the monthly payments will constitute 42.1 thousand tenge during the first 8 years, and 27.4 thousand tenge – during the remaining 11 years along with an apartment cost of 8 million tenge, initial payment of 10% or 800 thousand tenge, and a loan term of 19 years.

As of today, HCSBK has accepted 4,842 applications in the amount of 49.8 billion tenge, including 2,336 applications approved in the amount of 24.5 billion tenge, 371 loans worth 3.9 billion tenge issued.

In addition, according to the “Constructive Public Dialogue, the Basis of Stability and Prosperity of Kazakhstan” Address of the Head of State to the People of Kazakhstan (dated September 2, 2019), during the period from 2020 to 2023, the annual issuance plan will constitute 10 thousand applications. At present, the MIID of the RoK is preparing a budget call for the allocation of additional 40 billion tenge in 2020 (to the already approved 50 billion tenge).

Askeri Mortgage through the HCSBK 

In addition, starting from January 1, 2018, amendments to the laws were made to allow military servicepersons accumulating funds in the HCSBK JSC due to the received housing payments. Over 67 thousand military servicepersons will be provided with their own housing, savings for the budget over 25 years will amount to 824 billion tenge.

As of September 1 of this year, 85.75 thousand special accounts were opened by military servicepersons with a total revenue of 149 billion tenge.

Reference: the Military Prosecutor's Office - 300 million tenge, the National Security Committee - 330 908 million tenge, the Ministry of Defense - 85 528 million tenge, the National Guard - 24 179 million tenge, the State Guard Service - 2 724 million tenge, the Ministry of Internal Affairs - 295 million tenge, Syrbar - 2 181 million tenge, Department for Emergency Situations - 202 million tenge.

The HCSBK JSC issued 6,504 loans worth 98.683 billion tenge.
• loan rate - 8% per annum for up to 25 years
• down payment - 15% and above 
• acquisition of housing in the primary and secondary markets.


2) Completion of construction under the previously adopted programs

According to “Nurly Zher” State Program, the Holding’s subsidiaries, KMC JSC and BD JSC, have fully completed the construction of housing in 2018 under the previously adopted programs (Nurly Zhol, Regional Development Program until 2020).

In 2018, 97.3 thous. m2 (1,734 apartments) were commissioned in regard to rental housing of KMC JSC with a plan of 80 thousand m2.

Reference: In total, KMC JSC signed contracts for the construction and purchase of 1.1 million m2 (18,583 apartments). All the facilities were commissioned, including:
- 425.5 thous. m2 (7,234 apartments) were commissioned in 2015 with a plan of 401 thous. m2;
- 328 thous. m2 (5,993 apartments) were commissioned in 2016 with a plan of 326 thous. m2;
- 203.8 thous. m2 (3,622 apartments) were commissioned in 2017 with a plan of 165 thous. m2,;
- 97.3 thous. m2 (1,734 apartments) were commissioned in 2018 with an annual plan of 80 thous. m2. 

In 2018, 35.1 thous. m2 (588 apartments) were commissioned in regard to rental and leveraged housing of BD JSC with a plan of 34 thous. m2.

Reference: In total, BD JSC signed contracts for 589.4 thousand m2 (9,831 apartments). All the facilities were commissioned, including:

- 128.8 thous. m2 (2,036 apartments) were commissioned in 2016 with a plan of 124 thous. m2;
- 425.5 thous. m2 (7,207 apartments) were commissioned in 2017 with a plan of 389.3 thous. m2;
- 35.1 thousand m2 (588 apartments) were commissioned in 2018 with an annual plan of 34 thous. m2.

All funds have been 100% disbursed and the facilities have been accepted.

3) Shared housing construction through Housing Construction Guarantee Fund JSC 
HCGF JSC has started guaranteeing shared contributions in housing construction since October 10, 2016 (the new Law entered into force). For these purposes, in 2016 – 2017, capitalization of HCGF JSC was carried out from the NB in the total amount of 20 billion tenge.
According to “Nurly Zher” State Program, the general plan for guaranteed projects should be at least 90.3 billion tenge. HCGF JSC issued a total of 30 guarantees for a total amount of 102.3 billion tenge. Until the end of this year, projects worth 35.1 billion tenge will be additionally guaranteed.

4) Mortgage loans subsidizing for the public through KMC JSC

In this area, “Nurly Zher” State Program provides a mechanism for subsidizing interest rates on mortgage loans issued by STBs for the population. The operator is KMC JSC, which, starting since May 2017 (from the moment the mechanism was launched), is subsidizing up to 6% per annum within 10 years on a market mortgage issued by STBs up to 16% per annum.

In total, STBs approved applications received from the population in the amount of 36.2 billion tenge. At the same time, due to the introduction of the new ‘7-20-25’ Mortgage Program, this area has been removed from “Nurly Zher” State Program since June 22, 2018.

The applications for mortgages subsidizing approved by KMC JSC are retained until complete fulfillment of obligations within 10 years. For these purposes, 1.6 billion tenge is allocated annually from the National Budget.


6) Subsidizing of developers’ loans through Damu JSC

In this area, “Nurly Zher” State Program provides a mechanism for subsidizing interest rates on the private developers’ loans issued by STBs. The operator is Damu JSC, which is subsidizing 7% per annum within 3 years for loans up to 14% per annum.

Since the beginning of this direction implementation (since June 2017), Damu JSC has signed 74 projects for a total of 66.2 billion tenge to be subsidized (30.1 billion tenge in 2017, 24.5 billion tenge in 2018, 11.4 billion tenge in 2019).

Reference: STBs independently issue loans to private developers. The main problem of low activity is private developers’ debt overburden, the problem of providing additional collateral and covering more than 80% of housing construction with shared construction mechanisms, which allow attracting citizens' funds.


7) Rental housing for teachers and doctors through KMC JSC

The mechanism of using incoming rental payments by KMC JSC and mixing it with market borrowings for construction financing and acquisition of rental housing for doctors and teachers are provided within this direction under “Nurly Zher” State Program.

The total financing volume for 2019-2020 amounts to 40 billion tenge, including 20 billion tenge for 2019, 20 billion tenge for 2020. At the expense of these funds, it is planned to provide rental housing for 3 thousand teachers and doctors in 2019 - 2020.

As of today, contracts have been signed for the purchase of apartments in the cities of Almaty for 4.3 billion tenge (288 apartments), Qaragandy for 0.2 billion tenge (21 apartments).

A tender was also re-announced for the purchase of completed housing in the city of Nur-Sultan for a total amount of 1.9 billion tenge (146 apartments). The results will be summed up in the month of October.

The previously announced tenders for the purchase of apartments in the amount of 8.5 billion tenge in the cities of Nur-Sultan, Atyrau, Turkestan, Aqtau, Kokshetau, Qostanai with a total area of 34 thous. m2 (588 apartments) have been recognized as failed.

Rental housing terms:
• rent-to-own period - up to 20 years
• rate - 3.1% per annum
• down payment – not available 
• KMC JSC acquires housing only in the primary market

The target audience is doctors and teachers; the lists of applicants are provided by the LEA from among those registered on the waiting list.