Clare Nuttall in Astana -

Astana seems an empty place in winter when the Siberian cold drives the population inside. But in June the Kazakh capital's streets are a hive of activity as gangs of workmen frantically resurface roads and prepare new buildings for the dual birthday celebrations for Astana and President Nursultan Nazarbayev.

The most high-profile building due to open on July 6 - the city's 12th anniversary - is the Khan Shatyr pleasure dome, a giant tent-like structure designed by Sir Norman Foster that will contain shopping and entertainment centres, and an inside lake where residents can bask in winter when temperatures drop below -20° Celsius outside.

Along with "the lighter" and "the wedding cake," Khan Shatyr is one of the many exotic and improbably shaped constructions rising out of the steppe to stud the skyline of Astana's left bank. Some 40% of all construction work in Kazakhstan is taking place in Astana as the Kazakh government creates the flagship city of the future. More prosaically, tens of thousands of new apartment buildings will house civil servants and office workers who have yet to be lured to the new capital.

Staking a claim

Officially to remove vital government functions from the earthquake-prone Almaty, the decision to relocate Kazakhstan's capital to Astana was more likely motivated by the need to stake a strong Kazakh claim in the empty northern territories. Largely populated by Russians, the Kazakh government was determined to make a pre-emptive move against any possible land claim from Moscow.

The Soviet town of Tselinograd, the centre of Khruzhchev's ill-fated virgin lands campaign, was renamed Akmola after independence, but the new name's unfortunate interpretation, "white tomb," necessitated a second name change when it was made the capital: Astana has the unexceptional meaning of "capital" in Kazakh. A third change was on the cards two years ago, when parliament deputies proposed re-naming the city "Nazarbayev," but the president turned it down, saying the decision should be left "for future generations."

It is not only the city's outward appearance that has changed so dramatically in the last decade, Astana's role within Kazakhstan's economy has done so too. Over the last 10 years, the GDP of Astana has increased more than 50 fold and now accounts for 10% of Kazakhstan's total GDP, up from just 1.5% a decade ago, Astana's akim (mayor) Imangali Tasmagambetov told the InvestAstana 2010 conference in early June. At the same time, industrial output is up seven fold, and investment flows are 22 times higher than in 2000.

Astana is still not the most popular destination, especially among expatriates, who invariably resist moving from the more comfortable Almaty. One long-term expat recalls first coming to the city in the early 1990s. "The police drove out on winter mornings to pick up the drunks who had frozen to death in the streets," he says.

Although things have changed almost unimaginably since then, Astana still competes with Toronto and Ulaan Bataar for the title of the world's coldest capital. Even on hot summer evenings, swarms of vicious mosquitoes take away the pleasure of strolling along the Esil. Nonetheless, while appreciating these drawbacks, young Kazakhs from ambitious graduates to waitresses and taxi drivers are increasingly drawn to the city, with the promise of higher pay, plentiful apartment space and the lowest crime rate in Kazakhstan.

The most appreciative of the new city are those who have grown up here. Talgat, Astana born and bred, is proud of the buildings that have mushroomed in the last 10 years. "This is the Soviet era," he says, pointing to some (admittedly rather decrepit) six-storey apartment blocks. Then he turns to the brand new glass skyscraper next door. "And this is the era of Nazarbayev."

New hub

While Astana has been designated the city of government, there are also plans to turn it into a new hub for the services and manufacturing industries. "Astana is a symbol of our independence and a locomotive of development," Prime Minister Karim Massimov told the InvestAstana 2010 conference. "The city should be exemplary in attracting investment and create a good environment for domestic and foreign investment."

"Astana is turning into a city of service, a megalopolis in the processing and services industries," Tasmagambetov said in his address. "Our goal is to provide domestic products and services to the global economy."

As part of the attempt to attract businesses to the capital, Astana-New City, a 6,000-hectare special economic zone, has been built. Further incentives to invest in Astana are likely to come from Kazakhstan's Business Development Roadmap 2020, which will set our priorities for improving the business climate.

There is, however, more work to be done, Tasmagambetov says. "Through declarations alone, we will not attract investment to Kazakhstan. We must have a good atmosphere for business. We must have better infrastructure for tourism development - roads, comfortable hostels and sports facilities."

While "megalopolis" may be an exaggeration for a city that still numbers just 700,000 people, Tasmagambetov, who served as Almaty's mayor before being transferred to Astana, does have a reputation for getting things done. One big coup for the city was persuading General Electric (GE) Transportation to set up a locomotive assembly plant in cooperation with Kazakhstan's national rail company Kazakhstan Temir Zholy. The plant, opened in July 2009, will have capacity of up to 100 locomotives a year and serve other CIS countries in addition to Kazakhstan.

At the conference, several other international investors also voiced their plans to commit to Astana. Islamic investment bank Millennium Finance Corporation plans to set up a full service investment bank and private equity operations in Kazakhstan. Developing Astana is one of the three priority areas of the company, alongside Islamic finance and natural resources investment. "We are impressed by what has been achieved so far," Millennium's chairman and CEO, Keba Keinde, told journalists.

LIOR Corporation announced plans for the Central Park development, which when completed will house some 23,000 people. "We saw the very nice business climate and vast capacity of the country before we decided to invest in Kazakhstan," said LIOR's president, David Ben Nanney. In addition to apartments, shops, banks, schools and hotels, the development will also include a financial centre with eight skyscrapers each between 30 and 42 floors high, and a shopping centre topped with a miniature copy of the Dead Sea. The entire project will cost $5.5bn-6bn, according to estimates.