Ka$hakhstan

The Soviet-era architecture of Almaty and Astana is set to get a Dubai-style injection of glitz as a wave of investment targets Kazakhstan. Up for grabs is the vast and untapped commodity wealth of a country the size of Western Europe, with all the wheat, copper and uranium that Gulf states need.

On the drab streets of Almaty, Kazakhstan's largest city and commercial centre, a quiet revolution is taking place.

"When I first moved here in December, there were four or five restaurants fit to eat at," says Patrick Vosgimorukian, a French national born in Lebanon and now living in Almaty. "Now there are perhaps 15."

The pace will not slow for Vosgimorukian, either. The head of investment banking at Renaissance Capital in Kazakhstan, is being kept busy guiding foreign investment into a nation where economic growth has averaged 10 percent a year since 2000 - fuelled largely by its oil and gas industries.

Most of that investment is now coming from Gulf states, helping to plug the financing gap left by a local banking crisis coupled with increased government pressure to realise Kazakhstan's commodity production potential.

"People say that Kazakhstan is like Dubai was 10 years ago, and that's pretty accurate - as long as you don't think it's going to take Kazakhstan 10 years to get to where Dubai is today," insists Vosgimorukian. "It will be more like half that time."

The Central Asian country has attracted a surge of investment from Gulf states in recent months. This includes Abu Dhabi's Sheikh Tahnoon Bin Zayed Al Nahyan's decision last week to raise his stake in AO Kazkommertsbank, Kazakhstan's second-largest bank, to more than 25 percent; a $100m Islamic start-up courtesy of Qatar Islamic Bank; and Ithmaar Bank's plans to tap into the country's burgeoning energy sector with a $1bn energy investment fund in partnership with the government of Kazakhstan.

Real estate and construction is another burgeoning sector, and Gulf giants including Dubai World and Aldar have moved into Kazakhstan in recent months, eager to take a slice of such a fast-growing market.

Kazakhstan holds about 4 billion tonnes of proven recoverable oil reserves and 3 trillion cubic metres of gas, which industry analysts believe could reach 3 million barrels per day by 2015 with appropriately planned expansion of oil production and development of new fields. It also holds chromium, lead, and zinc reserves, the world's third-largest manganese reserves, the fifth-largest copper reserves, and ranks in the top 10 for coal, iron, and gold.

"Kazakhstan has immense natural wealth in the form of oil and gas and other mineral resources - but that wealth is to date more underground than above ground," Vosgimorukian says. "It's just starting to go from the exploration to the production stage, and as such we are at the inflection point where the next couple of years are going to transform the country."

Fund flows are following where the natural resources are, and Kazakhstan is loaded with natural resources," says Robert McKinnon, managing director of equity research at Al Mal Capital. "There's a lot of competition going on to access these resources - everybody truly feels like they've got to do it now if they want to get in there and participate, and establish trade relationships."

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