Mongolia’s new investment law ‘will boost property sector’New legislation that begins on Friday 1 November makes it easier for foreigners to invest in Mongolia and will increase confidence in the property market
Overseas property buyers will now find it easier to invest in Mongolia, thanks to new legislation that comes into effect today (Friday 1 November).
The new law means that individuals no longer need government approval to invest in strategic industries.
The Strategic Entities Foreign Investment Law, which restricted investments in strategic sectors, by requiring government or parliamentary approval for transactions, is being repealed.
The new law sets stable tax periods based on the investment amount and the location within the country of between five and 22.5 years. They apply from the day a contract is signed and are not subject to the changing legal environment during the lifetime of the deal.
Ray Withers, CEO of investment experts, Property Frontiers, which markets projects in Mongolia, tells OPP Connect, “Since 2007 the majority of interest and buyers has come from the UK or UK Expats based offshore (mainly in the Middle and far East).”
He says that previously there have been concerns over how foreign investors are treated compared to domestic investors.
“Every four years, with a change of government, there were worries that the rules might be altered to the disadvantage of foreign investors but now, under this new piece of much-welcomed legislation, foreign investors know where they stand today and into the future.”
Investor confidence is set to spread to the Mongolian property sector, says Mr Withers. “Previous foreign investors who purchased residential property in the capital Ulaanbaatar through Property Frontiers have seen average returns of 24% and up to 300% capital growth over the last four years with many keen to reinvest into the country’s lucrative commercial sector.”
Home prices in the Mongolian capital have risen eightfold since 2001 and commercial rentals are predicted to triple over the next five years as more international companies enter the market.
One retail project in the Mongolian capital, The Village @ Nukht, can be purchased on a rare freehold basis from US$254,000. Expected rental returns are 14.8% net, an assured yield of 12% for 24 months and up to 20% capital appreciation per annum.
Construction of the luxury shopping and leisure centre in ‘Billionaire Valley’ is planned to be completed by the end of the year.