April 25, 2013
Uzbekistan presents its own version of addressing the ‘housing issue’
Construction of housing depends on the general economic situation in the country. It is enough to remember that the overheating of the mortgage market in the U.S. spearheaded the grave problems in the global economy, still failing to be maintained at a steady pace. Today, when the world markets fluctuate feverishly, the housing construction sector needs new mechanisms of support more than ever, because people are willing to invest in real estate only when sure in the stable future.

Different views, but common goal

Experts, representatives of financial and banking sectors, businesses, designers and builders, a total of more than 300 participants from 50 countries came together this week in the capital in order to assess the current state of the housing market. The participants were chiefly expected to work out certain proposals to improve the situation with housing, one of the relevant issues of today, for the better, if not address it ultimately based on the synthesis of expertise of different countries. Of course, as noted by many experts, it is impossible to create universal mechanisms of effective development of the sector for everybody, since each country has its unique peculiarities and parameters to build the housing construction industry on. Meanwhile, there is a range of common factors to stimulate it. Their correct use is crucial. This was, perhaps, the cornerstone of all the backroom discussions during the event. Many agreed that the massive construction of affordable housing, especially in rural areas, is impossible without specialized programs supported by the state. It is this mechanism which in modern conditions might be a solution of a diverse range of issues associated with this process. Above all, the massive housing construction might address the major task of building of not just housing, but affordable housing, which representatives of the middle class, the stem of modern society, would be able to buy through credit mechanisms without any financial difficulties.

The title of the conference ‘Modern housing construction as the locomotive of complex development and reformation of rural areas and improvement of the quality of people’s life’ accurately reflects the expectations that Uzbekistan is now reposing on this field. The level of development of regions is an indicator of well-being in any country. This fact is of particular importance in the country, where 50% of the population or about 15 million people live in rural areas. Every year, 150,000 new families appear in the countryside, and more than 2.6 million families were established over the years of independence. Their provision with modern housing, social, transport and communication infrastructure has been one of the main tasks of the state.

President Islam Karimov touched upon this issue in the conference. According to him, unauthorized construction was prospering in the recent past; houses the village houses were built without general layouts and general designs. The housing was built from scrap materials because of the absence of regional construction industry and shortage of construction materials. People living in such houses faced problems with social conditions, not to mention the creation of appropriate infrastructure.

The conference participants seemed a bit confused at what the President was saying. Two days before the conference they were demonstrated modern standard design houses in Tashkent, Bukhoro and Samarkand, the happy owners of which told them about the benefits of the rural housing construction program by their own example. Indeed, despite the fact that the process has been recently launched, one can not say that Uzbekistan is just at the beginning of the great way of mass construction of standard design housing. It is the fifth year since the mechanism of building a high-quality and low-cost housing was launched.

Over the years, Uzbekistan had to organize a network of manufacturers of construction materials, establish construction contractors, and develop standard design of houses and related infrastructure for different regions from the scratch. Far not everything went smooth, the projects were changed in the course of the work, as well as organizational structure, and partners. However he makes no mistakes who does nothing.

Slow and steady wins the race

Perhaps the establishment of Qishloq Qurilish Bank in March 2009 on the basis of Galla Bank can be rendered as the starting point in this process. Its priorities included loans for construction of standard design housing for consumers, purchase of up-to-date equipment for manufacture of building materials for enterprises, and rendering of leasing services to specialized contractors. It is appropriate to note that construction of housing and development of the relevant legislative base was carried out in Uzbekistan previously as well, but it was in 2009 when it gained a complex nature, moreover, that year was declared in Uzbekistan as the Year of Development and Improvement of Countryside. Another important link of the system, the engineering company Qishloqqurilishinvest, which is responsible for the development of new residential areas in all regions, was founded middle 2009. From that time, the future owner of the house was released from the headache and was just to choose a standard design, land and payment option, and the engineering company undertook all the activities related to construction.

The standard designs developed by domestic specialists played a special role in the process of modern housing construction in the regions. Standard design of single-storey three-, four-and five-bedroom houses and social amenities are available at the present time. These houses relate to high-class comfort in their composition, floor space, space-planning decisions 3.2 meters in height combined with a rational operational zoning and two detached exits to the yard. Besides, the designers focused on the preservation of national identity and traditions with an eye to climatic conditions of a particular region of the country, natural factors like the wind, solar lighting, hydro-geological conditions and seismic stations. For example, when building houses in 7-8 score seismic activity areas, the builders lay anti-seismic zones on the floor level, concrete cores, monolithic cross frames, horizontal reinforcement of wall masonry in the corners and intersections of longitudinal and transverse load-bearing and self-supporting walls.

Meanwhile, the projects complied with modern standards of housing far not immediately. During his frequent working visit to the regions President of Uzbekistan met with the owners of new homes to know first-hand about the results of the standard design housing program. As a result, at the end of 2010 in one of his resolutions the President criticized the state of the construction of private housing in the countryside. In particular, the resolution disclosed certain drawbacks in the design of objects in Andijon, Farghona and other regions. Standard designs were developed with no overall consideration of the climatic conditions of a certain region, no proper study of national identity and local traditions, and other factors. The projects had big design flaws: an insufficient ceiling height, limited living space, especially in children\'s rooms, the defects in the necessary living conditions for family living.

It would be appropriate to give credit to the domestic specialists, who were prompt in responding to the criticisms and demands of proprietors, having prepared new and advanced designs. The success of the mechanism proved itself in a few years. For example, the total amount of construction of the first 847 houses on 42 tracts of land laid in September 2009 and commissioned in the first half of the following year amounted to 50.7 billion soums (official exchange rate of 25.04.2013 $1=2059.59 UZS). In 2010 the construction of 6,800 houses cost more than 428.9 billion soums. In 2011, another 7,400 modern and comfortable houses grew in 355 residential areas, with the total cost of about 576.5 billion soums. Last year, this amount reached nearly 906 billion soums allocated for building of 8,510 houses. In the same year, it was scheduled to build 10,000 single-family standard design houses in 353 rural residential areas worth 1.400 trillion soums. The above listed indexes on construction are certainly a serious figure, the participants noted, most importantly, rural residents were provided with affordable housing prices: one square meter of standard design housing in rural areas is now the average twice cheaper than that in urban areas.

Speaking at the conference about the uniqueness of the domestic model of standard design housing in the countryside, President of Uzbekistan noted that fundamental revision and reformation of the legislative base on housing was one of the fundamental issues that the country had to deal with in the first place. It was just useless to talk about implementation of any big housing program without changed legislation; it would be more like the infamous Potyomkin villages.

It would be appropriate to mention the development of the domestic industry of construction materials.

Manufactures of modern building materials, not inferior to foreign counterparts in quality, but best affordable, were launched across the country in a short period of time. Some ten years ago imported construction materials run the show on the shelves of local stores and specialized markets, and the builders themselves chose the products by foreign manufacturers when asked which materials were the best, imported or domestic. Those days, it was hard to argue that truth. Today the situation in the market of building materials has changed. 120 various projects were implemented as a part of measures on saturation of the consumer market with construction materials in 2005-2010. 175 new investment projects with a total capacity of 844.2 million brick equivalent were carried out in 2009-2011. Over the last decade alone, the volume of cement production has more than doubled: from 3.2 to 6.8 million tons per year.

Generally, it is projected to allocate more than $436 million for the further development of the sector in 2011-2015.

Most of the funds, $247.3 million, will be invested in the upgrade and renovation of existing capacities, and $189.5 million will be allocated for the construction of new facilities, as well as implementation of several projects for additional equipping and upgrade of the country’s cement industry.

On the other hand, it is not enough to build comfortable houses; it is necessary to create the conditions for the population to purchase them. Worldwide the mortgage ranks among the most convenient mechanisms for that. In Uzbekistan, for example, the interest rate charged on a mortgage loan is 7 percent per annum. As of January 1, 2013 individuals were exempt from paying property tax on purchased standard design housing until they repay their mortgage. It is noteworthy that in the last few years the mortgage contributed to the construction of over 9,300 apartments for young families to the total amount of 355.4 billion soums. Qishloq Qurilish Bank alone plans to issue mortgage loans to young families valued at more than 44.7 billion soums in 2013.

In general, it is planned to allocate $2.2 billion under the Rural Housing Construction Development Program by 2015. Asian Development Bank, the long-time partner of Uzbekistan plays an active role in implementation of the program. Uzbekistan signed with the bank the agreement on financing of multi-tranche program on the ‘Housing development in the countryside’ totaling $500 million. About $160 million has already been disbursed under the first tranche of the loan.

The importance of such cooperation was mentioned by the head of the state. Addressing foreign experts, he noted that Uzbekistan would appreciate their view and suggestions based on the experience gained in the sector in different countries. The republic is interested in expanding cooperation with all partners in terms of rural development, improvement of rural livelihoods, bringing them closer to the standards of developed countries. “We see you as the parties concerning about the success of the ongoing reforms in Uzbekistan and renewal of the country. We want you to feel our desire to work with each of you,\" said Islam Karimov. (Source: Uzbekistan today newspaper)


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