As it emerged from Soviet rule following independence in 1991, the Kyrgyz Republic faced the challenge of creating a system of property rights. A big obstacle was the lack of enforceable ownership rights, which resulted in insecurity, a lack of collateralized credit, and high transaction costs. For households and businesses, it was difficult to buy, sell, or inherit real estate, or to use real estate as collateral for borrowing. Several agencies were active in this arena, but their work was uncoordinated and largely deficient. Information on real estate rights was hard to access and retrieve.
The IDA-financed Land and Real Estate Registration Project was launched in 2000 to establish an efficient cadastre system—which is a comprehensive register of a country’s property that includes details of ownership, tenure, and location. This new property system was designed to provide the new legal framework for secure ownership, increased access to credit, decreased transaction costs, and more efficient buying and selling. The project set up registration offices throughout the country, provided assistance for legislative and regulatory reforms, and conducted training for diverse stakeholders—including government officials, civil society, and various organizations working in the real estate sector.
Most private properties are now registered. More than 2.5 million real estate units are registered, including 661,000 units whose situation was regularized under the project.
Highlights:
- Access to credit greatly increased. Access to credit increased through a new system that uses real estate collateral. More than 48,000 mortgages valued at over US$1.3 billion were registered in 2008.
- Property sales grew. Property sales grew to 48,100 units in 2007, although due to the economic downturn, there were only about 43,700 sales in 2008.
- Transaction costs decreased. Land-related transaction costs are estimated at less than 2 percent of property values for large estates and less than 1 percent for houses and apartments. This compares favorably with an average of 2.7-4.3 percent in OECD countries.
- Local registry offices became sustainable. Fifty registration offices were opened on schedule, with training provided to staff. Most were already able to cover operational costs through revenues generated from services rendered.
- Customer service improved. The project implemented a number of measures to reduce the opportunities for corruption, and to improve accountability and customer service.
The Land and Real Estate Registration Project cost US$10.95 million, of which IDA financed US$10.02 million. It was coordinated with local government, real estate professionals, real estate brokers, notaries, and lending institutions, all of which played an important role during implementation.
The World Bank Group coordinated with other donors before the project was designed. The US Agency for International Development (USAID) had conducted a small pilot project testing techniques for the collection of data necessary for property registration and had taken a lead role in drafting a Land Registration Law. The Swedish International Development Cooperation Agency (SIDA) agreed to finance technical assistance components. Both USAID and SIDA were active on property-valuation methodologies and property tax. Under a Swiss program, aerial photographs were obtained for Bishkek and Osh, which enabled the project to produce digital maps for these cities.
A Second Land and Real Estate Registration Project became effective in late 2008 and is slated to run through 2012. It will continue to register additional types of real estate in the national registry system, including informal urban settlements, urban parks, government properties, and pasturelands. The cadastral mapping also needs to be gradually upgraded. Currently, the majority of local registry operations are able to finance their current expenditures. However, they continue to depend on the government for capital investment, information technology, and quality control. To strengthen the Kyrgyz Republic’s overall system of property rights, the project aims to continue strengthening institutional capacity, particularly financial management of registry operations, records management, and strategy development.
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