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Astana: management of a new capital.

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In 1997, Kazakhstan, a Central Asian country formerly part of the Soviet Union, had the unique opportunity to create its capital city from scratch. Shortly after gaining independence, President Nursultan Nazarbayev made the decision to move the country's capital from Almaty, in the southwest, to Astana, a city previously named Akmola. Renamed Astana, a Kazakh word meaning "capital", the new seat of government is located in the formerly sparsely populated steppe lands, about three hours south of an area that once held Soviet gulag labor camps.

The most popular reason cited for the capitals move is that Astana is less earthquake-prone and more centrally located, helping distribute the country's wealth. Whatever the official reasoning, the building of Astana has come to symbolize Kazakhstan's new freedom and its rise as an economic power in the region.

A UNIQUE SHOWPIECE FOR CENTRAL ASIA

Fueled by its oil economy, President Nazarbayev developed Astana with the intention of making it a showpiece. Instead of continuing the existing Soviet-style infrastructure, he brought in foreign architects, developers and investors. In part, the plan involved recreating already famous buildings. Thus, the Astana skyline boasts its very own Arc de Triomphe, a pyramid housing the Palace of Peace and Reconciliation and a presidential palace (pictured above left), a refashioned White House with the additional local ornamentation of a blue dome. Many of the other familiar buildings come from neighboring Russia.

The president also wanted to premier innovational design. The Khan Shatyr, a complex of approximately 140,000 square meters, is the crown of this initiative. Resembling a tent tilting in the breeze, a homage to Kazakhstan's nomadic past, within its transparent walls there are high-end stores, a children's amusement park, and a beach club with sand flown in from the Maldives. British architect Norman Foster designed Khan Shatyr, which opened in 2010.

While many draw parallels between Astana and Las Vegas, another city of fanciful buildings rising like a mecca in a formerly deserted area, the climate could not be more different. Known as the second coldest capital in the world after Ulaan Baatar in Mongolia, Astana experiences temperature fluctuations of over 150 degrees in one year. The summers can be as hot as the high 80s, and in the winters, the temperature plunges to 40 below zero regularly.

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LANGUAGE HAS HAD A UNIQUE EFFECT ON THE CITY. While Russian continues to be the language of business and most widely spoken, 64 percent of the population speaks Kazakh as their first language. Kazakhstan has attempted to preserve its culture and language by installing Kazakh as the official language, but it has been less successful than other former Soviet Republics at wiping out Russian. Thus, many residents cannot comfortably read and recall local street names, which are all in Kazakh. Since even major streets may not have widely known names, locals give addresses by identifying buildings by their nicknames. In addition to buildings called "pyramid," or "presidential palace," addresses may include being located in or next to the "lighter, or the ashtray. The Central Concert Hall, with its greenish color and circular entrance resembling leaves, is referred to as the "cabbage."

MANAGEMENT THROUGH THE ELEMENTS

Beneath its shiny exterior, locals are concerned about the internal structures of many of the projects, their sustainability over time and the need for professional management.

"I think in Astana, we will observe some of the same difficulties we face in Russia," said Russian Svetlana Zuyeva, CPM. "There is new architecture incorporating the latest technologies and engineering techniques, but our local education, especially for facility management, does not provide the necessary training to maintain these systems properly."

Astana-based property manager, Sergey Apenko, CPM, agreed: "It is a challenge here to establish specialized training. Developers tend to take over management because they think they can cut costs by managing themselves, but often this becomes more costly in the long run." He added that many foreign investors left Kazakhstan when the economic crisis hit in 2008-2009, leaving buildings with no formal management in place. As a result, many buildings in Astana, which are, for the most part, no more than 10 years old, already look older, especially the interiors.

In addition to improving the quality of management, many local practitioners believe projects should be better tailored for the harsh weather. The Khan Shatyr's tent-like structure, for example, is draped in a white plastic, which reflects the glaring sun, warming the inside too much in summer, and is already showing wear and tear from the beating wind and snow of winter.

"A building's exterior can be misleading," commented Dinara Ibaimova, real estate consultant and IREM Member, "In Astana, facades look beautiful, but the internal can be substandard." Working with AOS STUDLEY in Almaty, Ms. Ibaimova advises real estate professionals how to plan strategically and think about efficiency, regional conditions, intended function and capacity. "Our market in Almaty is more mature; developers here are ready to listen and develop a product in line with international standards and client needs." As a result, while both Astana and Almaty have large retail complexes and residential housing, Astana has far more vacancies reflecting that for the capital, prestige frequently outweighs demand.

ASTANA'S FUTURE

Kazakhstan remains close allies with Russia and is part of a customs union with Russia and Belarus. This union, started in 2010, serves as Russia's method of building a regional economy like the European Union. Russia's attempts to get Ukraine to join the same customs union contributed to the explosion of unrest there that began in November 2013.

Kazakhs do not see themselves as in a similar position to Ukraine, despite the fact that their population is 25 percent Russian. "We are fortunate in that we have never succumbed to ethnic conflicts," said Denis Makeyev, CPM, resident of Almaty. As the Russian ruble has fallen, Kazakhstan has responded by devaluing its currency, the tenge, in early 2014.

The country also waits for Nazabayev to pick a successor. He is the only leader that has presided over an independent Kazakhstan, and at 73-years old, there are some concerns about what will happen when he can no longer lead.

Though the economy is less stable than it was before the economic crisis, Astana's development has increased thanked to being selected as the 2017 site for the World Expo, a large-scale international exhibition formally part of the World's Fair system. Being a World Expo site brings prestige, not to mention money and revenue. The theme is new energy, and Astana has already broken ground on projects intended to highlight sustainable practices.

The World Expo is just another sign that Kazakhstan is poised to take a prominent position among the world economies. Along with this prominence, Kazakh real estate professionals hope management standards will rise to meet the challenge. "We see the market moving slowly toward a change for end-users," said Ibaimova "Companies like mine are directly participating in the process of educating developers to think strategically beforehand. Management needs be part of that plan--not just tactical and reactive. Only with improved planning and management can a building be a viable investment long-term."

LEAH MISBIN (LMISBIN@IREM.ORG) IS SENIOR MANAGER, INTERNATIONAL PROGRAMS, AT IREM HEADQUARTERS IN CHICAGO.
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Title Annotation:spotlight / Global Practices
Comment:Astana: management of a new capital.(spotlight / Global Practices)
Author:Misbin, Leah
Publication:Journal of Property Management
Geographic Code:9KAZA
Date:Jul 1, 2014
Words:1200
Previous Article:The following is an exclusive interview with Melissa Boyle, CPM, of Arcadia Management Group. Inc., AMO.
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