Everyone is beating a path to Mongolia: the resources-hungry neighbours and former colonisers to the north and south, Russia and China, and the greatest global mining houses. There is uranium, gold, silver and especially copper and coal in vast quantities. In the southern part of the Gobi Desert, handily near the Chinese border, are two sensational deposits. They are Oyu Tolgoi, with a preliminary capacity to produce 400,000 tonnes of copper and 330,000 ounces of gold a year for 40 years, and Tavan Tolgoi, containing at least six billion tonnes of coal including 1.8million tonnes of high-grade coking coal for steel making.

Put simply, Mongolia is benefiting from the global commodity boom that has countries the world over scouring the earth for mineral resources. The billboards alongside Mongolia's pot-holed roads promote filters, pumps, diggers and drills, interspersed with ads for new series BMWs and Mercedes-Benz cars.

Economic growth, largely on the back of prospecting and mining, which provides 70 per cent of all government revenue, was up 7.5 per cent in 2007 and is at a sizzling 9.9% per cent in 2008.

After the Soviet downfall, Mongolia became an international model of pioneering liberalism for a time. The government gave back to its citizens most of the hundreds of companies inherited from the Soviet days, via vouchers they could redeem for company shares or for sheep and goats that had been unhappily collectivised. Half the population remains nomadic herders who live in circular tents knowns as gers, many of which contain satellite television sets powered by solar panels. The other half live in Ulan Bator, the coldest capital in the world during winter - mostly in Soviet-built flats, warmed centrally by a vast underground network of pipes.

The boom in Mongolia rolls on. 2007 was an extraordinary year of capital appreciation and rising prices - and the smart money is betting that 2008 may be just as spectacular.

Mongolia may seem an unlikely property investment destination, but the remote land-locked country is in the middle of a mining boom, with enormously rich mineral resources of copper, coal, and gold. This has brought in mining companies such as BHP, Rio Tinto, Ivanhoe, and Centerra Gold, as well as a large foreign diplomatic and commercial presence.

There is a severe shortage of quality housing. Ulan Bator is a Soviet-era city, ugly, badly planned. Accommodation is badly maintained, unattractive, and unsafe, and it is hard to convince expatriates to work in Ulan Bator. This has provided an opportunity for a few companies which are building modern high-quality condominium buildings.

Foreigners can freely own property in Mongolia through the Immoveable Property Ownership Certificate, which is equivalent to freehold ownership. Rising demand for accommodation from foreign experts and an extreme shortage of housing have generated very high yields. In Ulan Bator, rental income returns (yields) on high-end property are around 18%.

Prices have been rising rapidly due to rising demand. Capital appreciation has been around 15% per annum in the past three years, according to Mongolian Properties, a development company. Mongolia has low personal taxes, much tax avoidance.

Mongolia adopted a flat tax regime in January, 2007. Personal income taxes on income, including revenue from property, are imposed at the flat rate of 10% on net income over MNT 84,000 ($72). Deductions are permissible. In terms of capital gains are taxed in the same way as income. The round-trip costs of buying and selling a property are around 5.7%, including legal fees and the agent's commission (together 3.5%) and resale tax (2%).

"It appears to be a win-win situation," says London-based investment banker, Wesley Davis, 40, who has bought a three-bedroom apartment in The Regency Residence, the largest (14-storey), off-plan residential development to be built in Ulaan Baatar. "You invest around £50,000 for a new property in a country where the economy is growing at a rate of about 8 per cent and have a year-round rental income."

That potential is evident in Mongolia's booming tourism market. In 2007, the country had 500,000 visitors; it expects more than 700,000 in 2008. While most tourists are Chinese, escaping the polluted streets of Beijing for the clean air of Ulaan Baatar, there are increasing numbers visiting from Europe and North Africa. "This is evidence of how Mongolia's profile is increasing on the world stage," says Mr Eatock. "People are coming to realise that it is a safe, stable democracy that has a lot more to offer than kilometres of remote Gobi desert."

Ulaan Baatar, with its wide squares, parks and historic buildings, is the centre of Mongolian urban life. But most tourists head straight out to the windswept steppes for outdoor pursuits such as white water rafting, dog-sledding, helicopter trips, camel-riding, horse-riding and fishing for taimen - giant (2-3 metre) prehistoric salmon.

There is also much anticipation for the 2008 Beijing Olympics, which are expected to give another huge boost to Mongolia's tourism industry, with Beijing less than an hour's flight away.

The government is keen to expand its property market and is adopting a no-holds-barred approach to the buying process. All properties in Mongolia's capital, including apartments, are sold as freehold. There are no restrictions on foreign buyers, no capital gains or income taxes and no restrictions on the repatriation of capital.