Nicholas Watson in Prague -

As investment opportunities spread out across Eastern Europe and the CIS, it was only a matter of time before developers like Meinl European Land, often a pioneer in opening up new real estate markets in the region, made it to Central Asia and the Caucasus.

On June 8, Austria's Meinl said it's planning to set up a joint venture with the European Bank for Reconstruction and Development (EBRD) that will raise an initial €375m to finance the development of top-notch retail space in the Central Asia and the Caucasus, with a particular focus on the big cities of Kazakhstan as well as Georgia and Armenia.

"We see in these markets a significant potential for growth, but also a different risk profile than in the established markets in CEE," explains Francis Lustig, a spokesman for Meinl.

Meinl and the EBRD are part a growing band of global real estate developers taking an interest in the nascent market of Kazakhstan. Last month, Abu Dhabi-based Aldar Properties, the second-largest UAE developer by market value, said it would soon sign an agreement to develop a project in Kazakhstan, its first foreign venture. Other Middle East developers looking at Kazakhstan include Dubai-based developer Deyaar, owned by Dubai Islamic Bank. In June, the locally based but London-listed developer Chagala Group announced a three-year development programme worth $150m.

Details of the Meinl-EBRD joint venture were limited while final approval from the EBRD board is pending, but it will focus on the retail segment, where Meinl focuses much of its efforts. The Austrian developer reckons the retail segment in particular is primed to take advantage of the extraordinary wealth that's being generated from the oil boom in Kazakhstan.

According to the Economist Intelligence Unit, private consumption in Kazakhstan is expected to grow 146% between 2006 and 2010, rising from $37bn to $91bn. During the same period, private consumption per head will rise 141% to $5,770. By 2020, private consumption will have more than doubled again to around $200bn.

However, at present the choice of places for Kazakh people to spend their hard-earned cash are limited.

"Meinl Caucasus and Central Asia helps to address the significant undersupply of modern retail facilities in the targeted countries which hitherto is characterised by a nonexistent international quality retail sector," the EBRD said. "It will enable international retailers to enter the market and rent adequate retail premises."

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