To earn a pre-tax profit of 20%, a developer needs to sell housing at approximately 650,000 tenge per square meter. If the price is 560,000 tenge, the project's profitability will be significantly lower. This was stated by industry expert Imran Osmanov on Instagram, analyzing the economics of a conventional residential complex. This was reported by Qazaqyia.kz citing Kursiv Media.

Land cost and construction expenses

According to his calculations, building the complex will require a land plot of 2 hectares. At a cost of $325 per square meter, the land will cost $6.5 million, or about 2.9 billion tenge.

Osmanov estimates construction and other expenses at 16.5 billion tenge. This amount includes a cost price of 450,000 tenge per square meter before taxes. Thus, the total project costs, including land purchase, will be about 19.1 billion tenge.

Relationship between profit and price

If housing is sold at 560,000 tenge per square meter, revenue could reach 21 billion tenge. To achieve a 20% pre-tax profit, according to the expert's calculations, the cost per square meter should be about 650,000 tenge. If the developer aims for 30%, housing will have to be sold at 700,000 tenge.

"To get 30%, you need to sell at 700,000 tenge per square meter. That's quite a lot," Osmanov noted.

The role of the construction sector in the economy

The expert believes that the construction sector plays an important role in the economy, as it supports demand for products and services across several industries at once.

According to him, for an investor who owns land, it is sometimes easier to put money on deposit than to invest in construction. Implementing a residential complex requires significant effort and expense – from pouring the foundation to creating infrastructure.

"Otherwise, for me, as an investor or a person who simply owns land, it would be easier to just put the money on deposit and not worry about anything, because construction requires enormous effort," Osmanov explained.

Unaccounted additional costs

At the same time, in his calculations, the expert did not take into account additional costs for landscaping, laying communications, and creating necessary infrastructure. In some cases, the developer has to lay asphalt, build schools, and provide the residential complex with necessary facilities on their own.

Osmanov also emphasized that problems in the construction industry could affect many other business areas. A decline in developer activity will lead to falling demand for construction materials, finishing, household appliances, and other goods. Companies in the service sector, including taxis, may also receive fewer orders.

"Well, just about this sector of the economy, that it requires attention – it's very important, because if it disappears or simply stops functioning, we will lose sales in many sectors, starting from construction materials, decor, televisions, appliances, and the like. And ending with all sorts of household utensils, even taxis, there, I don't know, and so on," the expert stated.

Earlier, Kursiv wrote that housing rent in Kazakhstan is rising almost twice as fast as inflation.