Mongolia: Overview
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Mongolian property prices
rising rapidly, yields high
The boom in Mongolia rolls on. 2007 was an extraordinary year of capital appreciation and rising prices – and the smart money is betting that 2008 may be just as spectacular.
Mongolia may seem an unlikely property investment destination, but the remote land-locked country is in the middle of a mining boom, with enormously rich mineral resources of copper, coal, and gold. This has brought in mining companies such as BHP, Rio Tinto, Ivanhoe, and Centerra Gold, as well as a large foreign diplomatic and commercial presence.
There is a severe shortage of quality housing. Ulan Bator is a Soviet-era city, ugly, badly planned. Accommodation is badly maintained, unattractive, and unsafe, and it is hard to convince expatriates to work in Ulan Bator.
This has provided an opportunity for a few companies which are building modern high-quality condominium buildings.
Foreigners can freely own property in Mongolia through the Immoveable Property Ownership Certificate, which is equivalent to freehold ownership.
RENTAL YIELDS
Demand is strong and rising
Rising demand for accommodation from foreign experts and an extreme shortage of housing have generated very high yields. In Ulan Bator, rental income returns (yields) on high-end property are around 18%.
Prices have been rising rapidly due to rising demand. Capital appreciation has been around 15% per annum in the past three years, according to Mongolian Properties, a development company.
TAXES AND COSTS
Last Updated: Dec 18, 2008
Mongolia has high income taxes for non-residents
Rental Income: Rental income earned by non-resident individuals is taxed at a flat rate of 20%.
Capital Gains: Capital gains are considered as part of income and non-resident individuals are taxed at a flat rate of 20% on their capital gains realized from selling real property.
Inheritance: There are no inheritance taxes in Mongolia.
Residents: Residents are taxed on their worldwide income at a flat rate of 10%.
BUYING GUIDE
Last Updated: Jun 19, 2007
Buying costs are very low
The round-trip costs of buying and selling a property are around 5.7%, including legal fees and the agent’s commission (together 3.5%) and resale tax (2%).
LANDLORD AND TENANT
Landlord and tenant
Unknown
ECONOMIC GROWTH
Last Updated: May 03, 2008
Mineral wealth is pushing Mongolia forward.
In 1992, the Mongolian legislature adopted a new democratic Constitution. Since then, the government has alternated between the ex-Communist Mongolian People's Revolutionary Party (MPRP), and the National and Social Democrats and several other parties, now called the Democratic Party. At present the MPRP provide both the president and the prime minister, Bayar Sanj. There will be fresh elections in June.
Despite the explosion of riches at the upper levels of society, wealth is very unevenly distributed. The economic growth rate of 7.25% (5-year GDP per capita growth, IMF) has not been enough to cause a substantial ‘trickle down’. A large proportion of the population lives in poverty. However democracy is securely established and no-one is seriously trying to challenge it. Serious unrest does not seem possibility.
Politics is now dominated by debates about how much of the deposits the government should claim, and what taxes are applicable, and how those revenues will be distributed.
Interest rates are rising, reflecting fluctuating but high inflation, now at 20.6%.
Mongolian banks now offer long term mortgages to Mongolian citizens, a major step forward for the real estate market.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Looming housing slump in China
America & Caribbean
The great U.S. housing market crash
| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): n.a. | Rental Yield: n.a. |
| Rent/month: n.a. | Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
|
Roundtrip Cost:
n.a.
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: n.a. Rating is based on a detailed study of each country’s law and practice. | |
MAY 2007
- Next steppe in the buy-to-let boom: Brits invade Mongolia - Times online
MARCH 2007
- Ulan Baatar, Mongolia’s mining city and its buy-to-let boom - Overseas Property Ma
JANUARY 2007
DECEMBER 2006
- Mongolia pastures green - The Independent
NOVEMBER 2006
- Mongolia?s housing crisis - Iran Daily
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