Affordable Housing and Urban Renewal Project

green_affordable_housing
Project box

Geographical area: Asia and the Pacific

Location: Ulaanbaatar, Mongolia

City size: Large (between 1,000,000 and 5,000,000 inhabitants)

Promoter: National Government of Mongolia and Municipality of Ulaanbaatar

Developer: National Government of Mongolia and Municipality of Ulaanbaatar

Start year:

End-year:

Implementation phase: Implementation in progress

Project size: Neighborhood

Total area of intervention (in sqm): 1.000.000

Total investments (in USD): 570.1 million

Project overview

The Ulaanbaatar Green Affordable Housing and Resilient Urban Renewal Project focuses on redeveloping the outskirt districts of the capital of Mongolia. These districts, which are called ger areas, are located in the semi-peripheral areas around Ulaanbaatar. These districts are characterized by low living conditions, as these areas suffer from a lack of basic infrastructure, inefficient heating system and access to water, poor mobility connections and a lack of commercial areas. The entire redevelopment initiative will cover an area of 1,000,000 sqm, creating 20 eco-districts spanning 5,000 sqm each. The eco-districts will have a low environmental impact by employing renewable energy, implementing energy efficiency solutions and installing monitoring systems to reduce energy waste and consumption. The project is being developed by the Municipality of Ulaanbaatar and the National Government of Mongolia with the support of the Asian Development Bank. The initiative started officially in 2018 after a series of unsuccessful urban programmes developed to revitalize these areas and will conclude in 2027. The new redevelopment initiative aims to improve the living conditions of people residing in these peripheral districts by providing basic infrastructures, safer housing units, access to clean energy solutions and improve their connection with the city. The Ulaanbaatar redevelopment project is divided into five different project phases. The first phase is dedicated to the two core projects of Selbe and Bayankhoshuu, which will create the pilot eco-districts. Phases 2 and 3 will then redevelop an area of 400,000 sqm by creating 8 new eco-districts. Lastly, Phases 4 and 5 will conclude the project by creating the last 10 eco-districts covering an area of 500,000 sqm. The first two core projects will work as a driver to stimulate private investments to develop the additional eco-districts envisioned for Phase 2 to Phase 5, as well as to incentivize residents to relocate in these new districts. The main purpose of the redevelopment project is to provide residents of the ger areas with 10,000 new housing units and create climate resilient districts with access to basic infrastructure and essential public services. In addition, public spaces will need to cover at 30% of the total land use of each district, including 15% of open spaces and green areas. The eco-districts will also provide commercial spaces to serve the residents. Most of the housing units created will be assigned to rental housing (15%) and affordable housing (55%), ensuring their affordability for residents and lower income households, with the remaining units sold at market rate (30%). In addition, the project will incentive the provision of green mortgages by offering incentivized downpayments and low interest rates to the residents. These incentives aim to encourage ger residents to relocate and buy a new property in these new eco-districts. The creation of the eco-districts will have a significant impact on the environmental footprint of ger areas. The project is estimated to reduce direct and indirect emissions by 39.59 million tons of CO2 equivalent over the entire project lifetime. The estimated reduction in emission will be achieved with the installation of solar panels and renewable energy systems, the adoption of urban farming solutions and the implementation of green spaces throughout the districts. Lastly, the introduction of smart systems to monitor and control energy performance of new buildings and facilities will significantly decrease energy waste and consumption.

The redevelopment project will provide mixed-use eco-districts combining residential and commercial areas with a total of 30% of public spaces including 15% allocated to open spaces and green areas. The residential space will be divided into rental housing units (15%), affordable housing units (55%), and market-rate housing units (30%).

Benefits

The main economic impact brought by the redevelopment project is the revitalization of the suburban areas of the capital. The initiative provides significant economic support to private developers to invest in developing new housing units in the eco-districts, mainly through a long-term financing scheme. In addition, the initiative will provide green mortgages to ger areas residents to relocate and buy a property in the new eco-districts. The green mortgages will provide lower downpayments and a capped interest rate at 8%. The combination of incentives to private developers investment and the economic support to residents will significantly improve the attractiveness of these peripheral districts, increasing its real estate value and attracting new businesses in the planned commercial spaces.

The redevelopment initiative will renovate a total area of 100 hectares of the ger areas surrounding the capital, creating 20 eco-districts spanning 5 hectares each. The creation of these eco-districts will bring significant emission reduction effects, with an estimated yearly reduction of 200,000 tons of CO2 equivalent and 83 tons of black carbon. Over the 40 years lifetime of the project, the redevelopment will reduce direct emissions by 8 million tons of CO2 equivalent. Including emission reductions from indirect sources and replication effects, the project will reduce emissions by 39.59 million tons of CO2 equivalent. This intervention will improve climate adaptation of around 100,000 direct and 1,000,000 indirect beneficiaries, fostering the resilience of suburban communities and neighborhoods. Of the total area allocated for public spaces, around 15% will be allocated for the implementation of parks, green areas and open spaces. In addition, 10% of the entire surface of each eco-district will be covered with urban farming solutions on the ground or on new buildings and facilities’ rooftops. Regarding renewable energy, the initiative envisions the installation of solar panels on the buildings of the new districts. The solar photovoltaic panels will cover around 18% of the total carbon footprint generated by the new buildings and facilities. In addition, the redevelopment will implement smart systems to control and monitor renewable energy production and building performance in order to reduce energy waste and consumption.

The initiative will significantly benefit the local communities living in the ger areas. The rdevelopment of the eco-districts will provide 10,000 affordable green housing units to host the residents of the neighborhoods. On the total amount of housing units planned, 15% and 55% of the residential units envisioned will be allocated to rental and affordable housing respectively, allowing residents to afford the new housing units. The remaining 30% of housing units will be sold at market rate. The suburban areas targeted will be provided with urban infrastructures and public facilities which are currently lacking. These underdeveloped areas will be provided with basic public and essential services such as potable water and connection to the electricity grid. The intervention targeted in the eco-districts will significantly improve the general living conditions of ger areas residents. The project will also foster the participation of the communities in the eco-districts through skills training, community-based urban farming and solid waste management.

The project did not receive any certification.

Finance model

The entire redevelopment project has been funded with resources from the Asian Development Bank, the Green Climate Fund and the High-level Technology Fund, as well as from the Municipality of Ulaanbaatar, commercial banks, the Development Bank of Mongolia, private developers and beneficiaries.

The total cost of the project is around USD 570.1 million, with the Asian Development Bank providing USD 80 million in loans. The Green Climate Fund provided USD 95 million in loans and USD 50 million in grants, with an extra USD 3 million provided by the High-level Technology Fund. The Asset Management Company, a subsidiary of the Development Bank of Mongolia, manages USD 76 million provided by GCF under the Eco-district and Affordable Housing Fund (EDAF) to support Mongolian banks in providing financing to property developers to build low-carbon houses and to households through affordable mortgages with small downpayments and interest rates capped at 8%. In total, the commercial banks and the Development Bank of Mongolia provided USD 111.4 million in investments, while private developers and beneficiaries employed USD 131.8 million and USD 63.9 million respectively. Lastly, the Municipality of Ulaanbaatar brought also USD 35 million to finance the redevelopment project. To incentivize the resident’s relocation in the new eco-districts, the Municipality of Ulaanbaatar introduced the Voluntary Land Swapping Mechanism. This mechanism will provide residents that are willing to relocate with a voucher to purchase a definite number of sqm in the newly developed eco-district housing. The total number of purchasable sqm is calculated on the value of the land plot. The Municipality of Ulaanbaatar also requires private developers to follow certain requirements related to public spaces. Each eco-district is required to have 30% of the land use allocated to public spaces, including at least 15% for open spaces and green areas.

References and Credits

Asian Development Bank. Mongolia: Ulaanbaatar Green Affordable Housing and Resilient Urban Renewal Sector Project. Accessed on 01/07/2024. Available here.

Asian Development Bank (2020). Building affordable, green houses in Mongolia’s ger districts. Accessed on 01/07/2024. Available here.

Asian Development Bank (2022). Designing Climate Resilient Housing. Ulaanbaatar Green Affordable Housing and Resilient Urban Renewal Sector Project. Available here.

Image from Visit Ulaanbaatar, retrieved here.