But the activity has caused a spike in property prices and prompted concerns the market, already generously supported by other state programmes, might overheat.
Since 1997, Kazakhs have been obliged to transfer 10% of their wages and salaries to a pension fund. The state fund, which has monopolised the market, has assets in excess of $31 billion, mostly invested in government securities.
Under the scheme implemented early this month, those whose pension fund savings exceeded certain age-linked thresholds, for example $8,200 for 40-year-olds, were allowed to withdraw the excess amount for a limited number of purposes.
Those include buying property, repaying mortgages, transferring money to private asset managers and paying for certain healthcare services. The vast majority of people have so far gone for one of the first two options.
Property prices in Kazakhstan jumped 5% in January in the anticipation of the scheme, official data shows. An index run by property website Krisha.kz showed a further 3.5% increase this month, with the average price per square foot in Almaty, the biggest Kazakh city, hitting a five-year high.
The scheme has become a boon for developers, some of which have already hiked prices, but analysts are concerned a bubble might develop.
“While the supply of real estate continues to grow as well ..., this supply growth appears insufficient to compensate the spike in the demand,” said Ekaterina Marushkevich, associate director at rating agency Standard and Poor’s Financial Services team.
“Therefore, we see potential signs of overheating in the real estate sector.”
In the longer run, the bubble could hurt banks who provide mortgages, she added.
Galim Khusainov, the chief executive of Kazakhstan’s fifth-biggest bank, CenterCredit, was also critical of the scheme.
“We see another imbalance here: people repay mortgage loans with 7% interest using pension assets that provide returns of over 10%,” he said. “In reality, this is profitable neither for the bank, nor for the borrower.” (Reporting by Mariya Gordeyeva. Writing by Olzhas Auyezov. Editing by Mark Potter)