Mongolia’s appeal to foreign investors has improved noticeably with last Friday’s introduction of a new investment law.
From November 1, a new law has overturned previous legislation, making the financial environment within the country much more attractive to overseas investors.
In summary, the new law means that the playing field has been levelled for domestic and foreign investors – with the change tipped to boost investor confidence worldwide. One of the most attractive features of the new investment law is that it sets stable tax periods based on the investment amount and the location within the country, with rates set for between five and 22.5 years.
The rules are applied based on the day a contract is signed and are not subject to the changing legal environment during the lifetime of the deal.
Ray Withers, Chief Executive Officer of Property Frontiers, a company with experience in Mongolian investment, said: “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. Now, under this new much-welcomed legislation, foreign investors know where they stand today and into the future.”
Indeed, as the Managing Director of Mongolian Investment Banking Group LLC, recently said: “Tax stabilisation measures and provisions that will help to prevent future changes to the legislation should provide investors with the confidence that they need to return to the market.”
This increase in investor confidence is set to spread to the Mongolian property sector. Previous foreign investors who purchased residential property in the capital Ulaanbaatar through Property Frontiers saw average returns of 24 percent. Some also saw up to 300 percent capital growth over the last four years, with many keen to reinvest into the country’s lucrative commercial sector.
With the Mongolian capital witnessing real estate prices rise eightfold since 2001, and commercial rentals predicted to triple over the next five years as more international companies enter the market, now is the time to cash in on commercial property in Ulaanbaatar.
Property Frontiers is currently offering a freehold retail opportunity at The Village @ Nukht (pictured) in the Mongolian capital. Prices at the luxury shopping and leisure centre located in Ulaanbaatar’s “Billionaire Valley”, where construction is well underway and due to complete by the end of the year, start at US$254,000 (S$315,900).
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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