EurasiaNet Business & Economics - Uzbekistan: State Properties Unlikely to Find Buyers

BUSINESS & ECONOMICS

UZBEKISTAN: STATE PROPERTIES UNLIKELY TO FIND BUYERS - EXPERTS
1/27/09

Stakes in four landmark hotels are now on sale in Tashkent, but the State Property Committee is unlikely to find investors for the luxury complexes, industry insiders have warned.

This month, the Grand Mir Hotel and the Dedeman Silk Road hotel joined the Markaziy Hotel and the Tashkent Palace hotel on the market. The government has been trying to sell the Markaziy and Tashkent Palace for over a year, and was last month forced to extend the sale period, due to an absence of interested buyers.

Up for grabs are a 35 percent stake in the Grand Mir valued at $7.8 million, a 39 percent stake in the Dedeman Silk Road for $11.3 million, 100 percent of the Markaziy for $40.1 million, and 99 percent of the Tashkent Palace for $37 million.

Not only is the global investment climate working against the Uzbek government, but Uzbekistan’s balance of high-end, expensive rooms in four or five star properties is out of tune with attempts to increase the number of visitors to the capital, most of whom opt for smaller, more affordable hotels.

An unnamed manager at the Markaziy Hotels told the opposition news web site UzNews.net on January 27: "The problem is that there are too many hotels for the number of tourists visiting Tashkent and rates are often too unaffordable." He added that the hotels were designed to cater for business travelers and international organizations, but with the rupture in relations between Uzbekistan and the West in the aftermath of the 2005 Andijan events, occupancy rates rarely have risen above 25 percent in recent years.

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