Wild history of jailed Kazakh ex-Premier's $3 mn mansion makes it a tough sell in a soft market

Time of India

2 days ago

The bureaucrats at
Kazakhstan
's state asset management company are facing a task that's as unusual as it's near impossible: selling a villa of the highest luxury.
The 2,878-square-meter (30,980-square-foot) house in the swankiest corner of the capital,
Astana
, flaunts over-the-top features that have become a hallmark of luxury properties around the world: A pool with a unique water feature, a dance club and a theater in addition to 30 rooms that include sleeping quarters with a rare four-person bed. And it was once owned by
Karim Massimov
, the nation's longest-serving prime minister who is now doing jail time for an attempted coup.
But even at $3 million, a 40% discount from its one-time valuation, the weight of recent Kazakh history is making it a very difficult sell. An auction was cancelled in May — the third attempt at a sale just this year — and the state asset company is now contemplating how to finally remove the property from its balance sheet.
Attracting luxury buyers to a city that, despite Kazakhstan's vast resources wealth, hasn't yet developed a reputation as a playground for billionaires, was always going to be a challenge. The highest echelon of the wealth pyramid is small in the country of 20 million and the richest Kazakhs are reluctant to invest in a market that's stalled.
The villa's lineage may be thinning the potential market even further.
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'It will be very difficult to sell the house openly as everyone would know who bought it,' said Eldar Shamsutdinov, head of the Almaty-based think tank Kommentariy. It is also 'irrational to freeze so much money in property. The Astana residential property market is overheated, the investment attractiveness has dropped, the pace of prices growth has slowed. Demand for multimillion properties is almost fully satisfied.'
Shining City on the Steppe
How the mansion's story is affecting the sales process is a reflection of Astana's evolution as the capital of a newly independent nation, erected to flaunt its energy wealth and as an ode to its ruler. The second-largest former Soviet republic after Russia quickly raced ahead of its neighbors to build central Asia's richest economy, thanks to its energy exports.
Nursultan Nazarbayev, who ruled the nation for almost 30 years after independence, envisioned a glimmering city rising dramatically from the Great Dala — the Kazakh steppe — in the middle of the country. In almost every way, it would serve as a contrast to the old capital, Almaty, nestled in the southern mountains near the borders with China and Kyrgyzstan. The location was chosen strategically to expand the central government's footprint in the country's north, where many of the Russian minority live and ties with Moscow are the strongest.
Nazarbayev was intricately involved in the planning and in the early stages of development was known to sketch his dream skyline on napkins. The city is peppered with buildings designed by international architects, following the leader's concepts. Around the wide, wind-swept boulevards, the eclectic highlights include an entertainment complex shaped like a tent (credited to Norman Foster), a circus that looks like flying saucer and high rises that seek to bring in folklore aesthetic. The city was renamed Nur-Sultan to honor the former leader by Kassym-Jomart Tokayev, who followed Nazarbayev as president in 2019. That tribute soured after the coup attempt and the city returned to its previous name.
'Astana is the realization of Nazarbayev's personal ambition,' said Dosym Satpayev, the head of the consultancy Risk Assessment Group in Almaty. 'He wanted a larger place in history and considered it to be his brainchild.'
A construction boom followed the 1997 move as a metropolis of more than 1.5 million people sprang up in place of what was once a town of about 300,000. By 2008, when the villa was built, the bubble had burst as the global financial crisis clobbered local banks and brought lending growth to an abrupt halt. Kazakhstan eventually needed to restructure billions of dollars worth of debt and spent at least $18 billion to bail out its financial industry.
The country's prime minister during that turbulent time was Massimov, who was born in the future capital, then called Tselinograd. With an education that encompassed studies in Chinese, Arabic and economics, he taught at both Wuhan University and Columbia University in New York before a business career that included stints in Beijing and Hong Kong eventually took him to the highest levels of Kazakh banking.
As prime minister, Massimov cut a larger-than-life figure. He was known as one of the first in Kazakhstan's political elite to embrace social media and cultivated a network of friendly bloggers. Like some other post-Soviet politicians, Massimov also liked to flaunt his athletic prowess, sometimes spotted swimming or riding a bike in town. And he was also a well-known fixture of the Astana nightlife: A 2008 diplomatic cable released by Wikileaks describes him entertaining a group and dancing on a stage at the upscale club Chocolat, after drinks at the Radisson Hotel's cigar bar.
'Bloody January'
After two stints as prime minister, Massimov became the head of Kazakhstan's powerful national security apparatus. It was in that role that he got caught up in the 2022 unrest that became known as 'Bloody January.' The turmoil was the biggest threat to the country's stability since independence and was characterized as a coup attempt by the government. Massimov was arrested as an alleged instigator. In 2023, he was found guilty of high treason and sentenced to 18 years in prison and the confiscation of property.
In the aftermath, the state seized Massimov's assets, including the mansion in Astana. According to official filings, ownership of the house was transferred in 2009. The national security committee described the property as a 'gift' from 'a business structure.' When authorities took control, they found $17.2 million in cash, 'elite watches, gold bullions, antiques and much more,' according to a National Security Committee statement at the time.
To potential buyers, all that signaled not just a wealthy owner, but someone well connected with powerful allies across different strata of Kazakh society. And as political fortunes ebb and flow, it might be difficult to puzzle out just how a multimillion-dollar wager on such a high-profile property might play out now or in the future.
'People with big money are quite cautious,' said Satpayev at Risk Assessment Group. Without a clear succession plan for the current leadership, they may be 'fearing that there might be revanchism.'
Property Roller Coaster
For sure, it would be difficult to stay inconspicuous, even though the villa in the posh Karaotkel district remains hidden behind a wall more than two meters (6.6 feet) tall. The area, with its large park, swanky hotel and an upscale tennis center that once hosted Rafael Nadal, is also a symbol of Kazakhstan's growing wealth gap where bureaucrats and business people mingle with the new city's elite.
In the end, the state might decide to keep the property and convert it to a different use, like an administrative building or a kindergarten, according to Shamsutdinov at Kommentariy.
Through all the political upheaval, Astana's property market bounced back from the lows of the financial crisis, thanks to a series of government measures from mortgage subsidies to a program that redirected retirement savings to real estate.
By 2021, the market was showing signs of force as country-wide purchases jumped 97%, according to Halyk Finance research. Geopolitics intervened again as the ripple effects of the Russia sanctions over the invasion of Ukraine sparked a steep decline, only to be followed by a sharp bounce in rental prices as Russians fleeing mobilization swelled the city's population.
As of now, used-home prices are heading the other way again, dropping 1.9% this year through May, with nearly 12% inflation and a 16.5% benchmark interest rate cooling demand.
Housing has become a particularly sore spot for many Kazakhs. After all the shocks of the past decade, wages are stagnant and unemployment remains stubborn, sapping the property market from much-needed impetus. That dynamic makes selling a lavish and notorious villa an even more daunting proposition.