Thursday, April 24, 2014

Recent interview with Mongolia Growth Group management

Capitalist Exploits had a great article today about the recent announcement of a huge new skyscraper development in downtown UB. The view seems to be that this is an inflection point for Mongolia real estate.

Capitalist Exploits:


It’s happening even sooner than we expected; the skyline of Ulaanbaatar is changing and in dramatic fashion. Not only are old Soviet-era block buildings being replaced by modern residential and commercial construction, skyscrapers are coming too. As Mongolia’s capital city gets modernized and incomes and wealth rise at a rapid clip, some foreign investors and real estate developers are looking to capitalize on this economic growth by going vertical.


For anyone paying attention, there have been numerous signs of Mongolia’s progress, but with regards to the property market specifically, there is now a large flashing neon sign that can’t be missed even by the most casual observer. The sign reads:

“Nikken Sekkei signs LOA with Mon-Uran to design $300M, 68-story tower in Mongolia”

Why would anyone invest $300M in a 4–5 year property development project in Ulaanbaatar, let alone build a 68-story skyscraper – a full 8-stories higher than the tallest building in Boston?
If this isn’t a neon sign announcing that serious change is at hand, then I don’t know what is. $300M. 68-stories. In MONGOLIA. Clearly the property market is a wide open opportunity and big foreign investors are coming in. Mark this skyscraper announcement down as a milestone trail-marker in the modernization of Ulaanbaatar. It is big and it is meaningful.

I think Mongolia Growth Group is sitting in a great spot. They have brought on a CEO who has been involved in many successful large scale real estate ventures and developments. He has the connections and access to the people with money. Now that this 68 story project has been announced we could be at the cusp of a big movement of capital back into Mongolia and Mongolian real estate. The mainstream has been focusing on the Rio/GOM Oyu Tolgoi spat but the government has changed its tune and money is moving back into Mongolia.

The economy is also starting to see the benefit of the Oyu Tolgoi mine as the Mongolia's trade deficit plunged 98% mostly due to exports of copper from Oyu Tolgoi. It has been a long hard road but it looks like spring is coming after a long winter.

Here is a link to the presentation that was given on the recent MGG road show. It describes in detail how the company plans to grow without diluting current shareholders.

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