Kazakhstan and Central Asia Could Revive the Great Silk Road by 2027
Kazakhstan has a historic opportunity: The revival of the Great Silk Road is within reach. With the redistribution of global logistics flows, a significant portion of freight traffic is now passing through Central Asian routes.
New Incentives Through Global Developments
For decades, the domestic needs of Central Asian countries were met by facilities left over from the Soviet era, with virtually no demand for modern Class-A complexes. However, the pandemic and international sanctions against the Russian Federation have provided new incentives for the development of regional logistics and warehousing infrastructure.
The pandemic has led to a significant expansion of the e-commerce sector, which in turn caused a sharp increase in demand for high-quality space. Sanctions have altered the configuration of Eurasian transit routes. Central Asia now has a unique opportunity to become the most important transportation and logistics hub for the entire continent and to revive the ancient Silk Road in a new economic reality.
Kazakhstan as a Key Player
Kazakhstan benefits from its strategic location: The shortest and most reliable route from China to Europe passes through the country, known as the Middle Corridor or the Trans-Caspian International Transport Route (TITR). In 2023, 2.76 million tons of cargo were transported via this route, marking a 65% increase from the previous year. By 2024, cargo traffic is expected to grow to 3.29 million tons. Delivery times have significantly improved, dropping from 38–53 days to 18–23 days. In the near future, transport time could be reduced even further to 14–18 days.
Growing Demand for Logistics and Warehousing Infrastructure
Market dynamics and the growing needs of various players are driving the development of Kazakhstan’s transport and logistics infrastructure. Four major groups currently dominate the demand for warehouse space:
- International brands
- Marketplaces
- Domestic retailers
- Foreign logistics companies (mainly Russian)
The demand for modern warehouse space is estimated at around 500,000 square meters. However, supply is lagging behind:
- In the first quarter of 2024, only 68,000 square meters of new logistics space was added.
- In total, only 250,000 square meters of completed or planned logistics complexes are available.
- The current warehouse stock in Kazakhstan is only 1.4 million square meters.
High Demand, High Prices
The lack of modern warehouse space has driven exceptionally high rental prices. In cities like Tashkent and Almaty, rental prices exceed $150 per square meter per year – about 15% higher than in Dubai or Manchester and 60% more expensive than in the Moscow region.
Investment Opportunities and Challenges
Despite high costs, Central Asia remains attractive for investors as the payback periods for warehouse complexes have been cut to around five to six years—compared to Europe, where this can take twice as long.
With an average return of 17–20% per year, investors can recoup their investments in a short period. Yet, the situation remains paradoxical: Kazakhstan is experiencing an unprecedented warehousing boom but currently lacks the infrastructure to meet this growing demand.