Following 2 months of nationwide lockdown the Government has recently declared an end to the State of Emergency. The quarantine regime, however, was extended until the end of May, although with some easing to the earlier imposed strict measures.
Business activities are gradually being restarted in stages. Domestic flights to the capital and regional centres have resumed. Small and medium scale service enterprises, as well as stand-alone non-food outlets of up to 2,000 sq m, have now reopened for business. Shopping and entertainment centres, hotels, indoor sport and leisure facilities, as well as in-house F&B operations will resume later, once the epidemiological situation in the region is satisfactory.
The impact of COVID-19 on the economy and declining business confidence will present challenging times for the local real estate sector. While there is still uncertainty, the market players will continue to adopt a wait and see approach and, meanwhile, revise the future strategies to reflect the new normal.
Given the economic implications of COVID-19 and the sharp reduction in oil and gas prices, the Kazakhstan economy has been severely hit in the past few weeks. Following a month of near total lockdown, some easing of quarantine measures and a gradual revival of business activity across the country are expected later in May.
The retail and hospitality sectors are in a state of acute crisis with a slow and difficult recovery ahead. Despite the support offered by the State to some affected businesses, not all operators will be able to survive a prolonged forced closure. The perceived post-pandemic surge of consumer activity will be delayed and short-lived due to limited financial resources and a reshaped tourism landscape.
Offices are more resilient to the recent challenges, however, will later have to embrace the rapidly evolving agile working practices. Rental concessions have been negotiated individually and typically only for the period of the official quarantine. Fortunately for industrial real estate, low vacancy and increased demand for storage and distribution space will continue to stabilise the market indicators.
Amid low investment activity in recent years, the impact on capital markets transactions will not be particularly noticeable. The market players generally have adopted a ‘wait and see’ approach.