March 20 (Bloomberg) -- Kazakh homebuyers are being left out in the cold by the global credit shortage.

In Almaty, the biggest city in the oil-rich Central Asian state, about 30 people on March 18 rallied against the hole in the ground where their new apartments should be. Work stopped after builder AO Corporation Kuat couldn't get funding.

``All they've done is dig a crater,'' said Laura, 23, who paid $70,000 for a one-bedroom unit that was supposed to be ready by May. ``Now we have to rent an apartment for $600 a month,'' she said, declining to give her full name as police checked the papers of reporters covering the demonstration.

About 29,000 people like Laura had prepaid for uncompleted apartments by September, when credit for Kazakh builders dried up, according to the Industry and Trade Ministry. More than 140 housing projects have been halted in Almaty alone, forcing the government to provide $4 billion of emergency funding to get contractors working again.

``The banks aren't offering new liquidity to construction companies, which has slowed building,'' said Sadyr Shaguzhayev, head of lending and capital markets at Almaty-based Bank TuranAlem, the former Soviet state's second-biggest lender.

Moody's Investors Service in November reduced the credit ratings of six Kazakh banks, including TuranAlem, because of concerns they wouldn't be able to refinance about $40 billion of international debt.

Kazakhstan's economy grew more than 10 percent annually from 2000 through 2006 as the country exploited the biggest oil and gas reserves in central Asia. Growth slowed to 8.5 percent last year after the credit crunch curtailed a national building boom.

Boom to Bust

Kazakh construction companies had sold 280 billion tenge ($2.32 billion) of unfinished apartments by September, including 170 billion tenge financed by mortgages, according to government statistics.

``There was a sense the boom was going to go on,'' said Anna Walker, a senior analyst at the Economist Intelligence Unit in London. ``Then, almost overnight, lending to the banks from overseas dried up.''

Kuat managers didn't answer questions faxed to the company's office in Almaty.

In a report posted on the company's Web site Feb. 18, Chairman Oleg Num said Kuat was trying to attract investment to ``overcome the consequences of the financial crunch and fulfill its obligation to homebuyers.''

This week, Kazakhstan's Agency for Financial Supervision said it would curb foreign borrowing by banks to strengthen financial markets.

The measure is designed ``to cut dependence on borrowing from abroad,'' the agency said.

IMF Warning

The International Monetary Fund in October 2006 said the pace of credit growth and external borrowing in Kazakhstan was making lenders more vulnerable to external shocks such as a reduction in the availability of financing.

``The problems that hit the Kazakh construction industry are due to the world financial crisis,'' said Aigul Aspandiarova, spokeswoman for the mayor's office in Almaty. ``It's obvious that Kuat won't complete its projects on time.''

Almaty, Kazakhstan's financial center and former capital, had been the main beneficiary of Kazakhstan's building frenzy.

Gleaming office towers and apartment blocks have sprung up to house oil millionaires and their Bentleys, as the city of 1.6 million plans to build a $1 billion winter sports complex funded by local developer Capital Partners.

Residents include President Nursultan Nazarbayev's daughter Dinara Kulibayeva and her husband, Timur Kulibayev, two of Kazakhstan's six billionaires, according to Forbes magazine. The couple own Halyk Savings Bank, the third-largest Kazakh bank.

Lenin's Shadow

Laura, the former bank clerk, just wants to live in her own home.

``A Kuat representative told us the company has no money, as the banks let it down,'' she said, dressed in black jeans and a beige sweater at the protest in the shadow of a monument to Bolshevik leader Vladimir Lenin.

Homebuyers are getting help from the government, which on March 13 agreed to provide $500 million to help banks finance loans to builders in Almaty. Separately, the $4 billion emergency investment program includes funds to purchase 6,000 uncompleted apartments in Astana, the capital.

That may not be enough, said Bibigul, 36, who sold her Soviet-era apartment to buy a new one in the Kuat development.

``I don't believe Kuat will finish the apartments for us,'' she said at the demonstration, holding one of her two children. ``We wanted to improve our living conditions.''

To contact the reporters on this story: Nariman Gizitdinov in Almaty, through the Moscow newsroom at ngizitdinov@bloomberg.net; Rodney Jefferson in Edinburgh at r.jefferson@bloomberg.net.

Last Updated: March 20, 2008 03:19 EDT