Interesting piece in the Sunday Times on the sudden surge in the number of British people investing in the luxury flats being built here. When my mother told me about the article, my blood rose as it usually does over the subject of the British mania for investing in property, particularly in the spread of this to developing countries. I used to find house prices in the South East amusing, even with its knock-on effects on the British economy - but that was before Liverpool won the Capital of Culture 2008. How we larfed when we heard about someone from down south buying a house in Liverpool's Kensington, presumably on the connotations of the name, for £40,000. It reminded me of a competition in the 80s in the Sun newspaper to 'win a house on the Bread street!' Even in the late 90s the house Ringo Starr was born in on those streets sold in auction for just a few thousand pounds. Hang on while I do a quick search on the price of 2-up 2-downs in Liverpool 8... well, it looks like you can still find one in the Dingle for a mere £90,000.
It's ridiculous to blame the Capital of Culture per se, it's property mania that's at the root of it. And of course year after year those people who repeat ' You can't go wrong with property, it only ever goes up' are proved right, so who am I to call it madness?
The prospect of an article telling me how British investors are spreading their insanity here fired all the usual rage buttons with me. Property prices in Ulaanbaatar are currently going up by 20% each year, the population is set to triple in the next ten years, and so there are more and more people desperately looking for homes. As I have already said, the average rental price for an apartment is above the average salary. [Edit: Of course, this is on the private rental market. Families fortunate enough to live in social housing allocated by the communists pay around $10 a month rent, which with utilities brings it to just under half the average monthly salary. I do not yet know how much the rent will be in the city's new '40,000 homes' scheme, nor how much social housing has been allocated since the end of communism. Many thousands of homes were built in the communist era, the last big wave being in the 1980s. Of course, all this information I'm posting is extremely flakily researched and entirely subject to failures of my understanding.]
Are people looking for holiday homes here? Of course, there is a shortage of decent hotel accommodation, but surely if you go on holiday to Mongolia, you want to stay in a ger? As it is, there are dozens of sparkling new buildings standing completely empty, while children and the destitute are living in any hole they can find. The government is trying to push a bill through parliament to allow the building of casinos that only foreigners can visit, and of course next year's Beijing Olympics should mean a big knock on growth of tourism here. At present there's only half a million visitors a year to the country.
It turned out on actually reading the article that the flats being bought by Britons are luxury apartments being built for Western high-flying business men and executives. It surprises me that there's that much of a demand for them, or that the demand is predicted to increase, but that's probably correct. If the high-flying executives are prepared to pay astronomical rents to live in their ivory towers then where's the harm? One investor in the article, Lord Newborough (now, at least - if he didn't buy his title - he's following a long and noble family tradition of squeezing the life-blood out of tenants) said “I was looking for an interesting high-yielding investment. It’s a democracy and the government are keen to see more foreign investment. Providing common sense prevails, it should be a very good long-term investment.” My failure to see how the whole world can see property prices increase ad infinitum is probably just a failure of my common sense organs - after all, the world's population is ever-increasing - it stands to reason, don't it? Before investing in the long-term Mongolian property market, I'd be interested in finding out when the Mongolian government are going to get around to ascertaining whether or not UB is the most polluted city in the world, and what they propose to do about it. Actually, the answer to the latter is bound to be 'build more homes', so no doubt the boom will continue.
A new development of luxury apartments just behind the Zaysan Tolgoy, beneath the Bogd Khan Uul -the 'Holy Mountain'- the world's oldest protected National Park. Also, conveniently within sight or just two minutes walk of the Children's Prison.
Admittedly, the idea of owning my own home is as attractive to me as to anyone else. I'd quite like to settle in Mongolia. I could probably buy a flat like mine in one of the nicer old soviet buildings for around $30,000. By next year it wouldn't surprise me if the same would cost $60,000. I guess I could buy a fully kitted-out ger for $1000.
Certainly, some of the poorest people in the city are getting rehoused - I imagine that the rate it's happening at is slow, but it is happening, and I believe that if they want to, the government here can get on top of the situation. I was giving my college students an end of term speaking test the other week. The student I was speaking to didn't have much English and so we chatted about his family. He lives with his mother and two sisters.
"Do you all live together in an apartment?"
"No, ger!" he replied with a smile.
"Well, uh, what do you think of living in a ger?" I asked.
"Ger is good," he replied proudly.
"So your family moved to the ger districts from the country...?" (he nodded) "How long have you been living in the ger district of UB?"
"Are you going to, would you ever move into an apartment if, er, if one was available?"
"Yes. Next year, next year we get," he said and his smile now broadened.
"So, you're going to be rehoused?" (nods) "Are you happy about that?"
"Yes, apartment wery good!"
The lad was about twenty years old, but he looked thirty or over. Living in the ger districts of UB is not great for the skin.
[My apologies to anybody reading this who buys-to-let, and who might take offense at my views on property investment. It is my personal opinion that spiralling house prices are harmful for a society and that, broadly speaking, there should be some kind of law against it. I'm a fan of social housing, where that can work positively alongside encouraging home ownership I am very happy. Where rents increase faster than salaries, then landlords are, as I see it, taking food from the mouths of their tenants. I am aware of the counter-argument that investing in property is investing in the infra-structure of a country, and is all for the nation's long-term good. I hope that it proves to be so]