MYANMAR: Real estate faces an overhaul, with investors pouring in as its economy opens up, while local residents are priced out of Yangon's commercial areas

Record ID: 602653

  • Title: MYANMAR: Real estate faces an overhaul, with investors pouring in as its economy opens up, while local residents are priced out of Yangon's commercial areas
  • Date: 16th March 2012
  • Summary: YANGON, MYANMAR (RECENT) (REUTERS) SULE PAGODA ROAD IN DOWNTOWN YANGON BUSINESS AND RESIDENTIAL TOWER UNDER CONSTRUCTION IN DOWNTOWN CONSTRUCTION WORKERS HIGH-RISE BUILDING UNDER CONSTRUCTION BESIDE OLD APARTMENT BUILDINGS RESIDENTIAL AND BUSINESS TOWER SALES EXECUTIVE AT SHOWROOM OF MOTHERLAND TOWER SALES EXECUTIVES IN FIRST FLOOR OF CONSTRUCTION SITE SALES DIRECTOR AT KYAW BUSINESS AND RESIDENTIAL TOWER ZAW MIN TUN SPEAKING (SOUNDBITE) (Burmese) SALES DIRECTOR AT KYAW BUSINESS AND RESIDENTIAL TOWER, ZAW MIN TUN, SAYING: "Normally we don't have many flats that are left unsold. Within three to four months since they're finished, they're sold out." VARIOUS OF ZAW MIN TUN EXPLAINING USING FLYER
  • Embargoed: 31st March 2012 13:00
  • Keywords:
  • Location: Myanmar, Myanmar
  • Country: Myanmar
  • Topics: Economy
  • Reuters ID: LVA7H7KGW9L9O0E9FNYYFTCQ93SQ
  • Story Text: Property salesmen in Yangon are having a good year.
    The capital of a former British colony ruled for five decades by a reclusive junta has faded under economic mismanagement and sanctions imposed by Western governments because of the military regime's human rights record and refusal to embrace democracy.
    But ever since the one-year-old civilian government launched a series of political and economic reforms, foreign investors' interest in the country has spiked and many have their eyes on real estate.
    Zaw Min Tun mans the on-site sales office for a 12-storey business and residential tower under construction in downtown Yangon, and says units are selling like hot cakes.
    "Normally we don't have many flats that are left unsold. Within three to four months, they're sold," Zaw Min Tun, a sales director at Motherland Group Construction, said.
    A 1,800 square feet apartment in Yangon's Kyaw Business and Residential Tower sells for about $225,000 U.S. dollars, and property agents say prices will keep going higher.
    Owner and director of Kyaw Business Group, Naing Lin Htike, said there is a lot of local and foreign demand, and buyers from Singapore, China and Korea are snapping up units.
    "After this election, the government will give the right to buy apartments to foreigners, so foreigners are coming in, and the value is going up," Naing Lin Htike said.
    Foreigners are currently not allowed to own property in the country, although they can rent offices and houses from Myanmar citizens.
    In some cases, they are able to sign for long-term leasehold-type purchases as long as they have a local partner.
    Authorities are working on amending the Foreign Investment Law and are studying regulations in other countries, officials said.
    A key litmus test for foreign investors is the conduct of the by-elections on April 1, which pro-democracy leader Aung San Suu Kyi is contesting.
    Businessmen are flooding in, sensing that the country -- with its natural resources of oil, gas, timber and gems -- could be the next big investment story once sanctions are removed or softened.
    "We see Myanmar as an awakening giant, the last Asian frontier if you want to call it that way. There is a lot of attention, especially from Asian countries, the Thai and the Chinese are all over the place. Right now it is not yet possible to invest efficiently in this country," said fund director Alexis de Mecquenem from Hong Kong-based fund management firm Cube Capital.
    He recently visited Myanmar to look at investment prospects, and said although there is potential, it is still an untested market, and risks are high.
    "A lot of the risk we see is if Myanmar is the next fancy story on the map in Asia for the time being. There could be a lot of hot money flowing to the country, too much money creating a kind of asset bubble, speculation to the point where prices can crash," de Mecquenem said.
    While the property boom is bringing in investors, it is hurting local businesses and pricing out Yangon residents from around downtown.
    New Win Restaurant, a local watering hole in what was once the quiet suburb of Hledan in northwest Yangon, was given an August deadline to shut down, to make way for a new condominium building.
    Rent was only 300,000 kyat ($370 U.S. dollars) when Ma Thida opened her restaurant eight years ago.
    But now she pays five times more, as Hledan transformed into a bustling centre with universities, retail shops and high-rise buildings.
    Ma Thida said she will move her restaurant to a less lively location and where there is less customer traffic.
    "Everybody would feel sad if they faced a situation like mine, because you know, many people know the restaurant. So I feel sad," she said.
    But the overhaul seems inevitable.
    Across the river from Yangon, in the town of Thanlyin, a new residential space is under construction.
    The concept of Star City, developed by one of Myanmar's biggest companies Serge Pun and Associates (SPA), is a self-contained community with high-rise condominiums, a school, a mall, and a golf course.
    It is a half-hour drive from downtown Yangon.
    Star City says the condominium units target middle-class families, enticing them with 24-hour electricity, potable water supply and elevators, which is considered rare in Myanmar.
    Directors of sales and marketing at Star City, Soe Thiha Hlaing, is optimistic about Myanmar's real estate market.
    "The real estate market has always been the most trusted form of investment here in the country so far. And we have a very rosy outlook. It's going to flourish, it's going to grow," he said.
    He said all 300 units in the first two buildings, starting at $50,000 U.S. dollars for a 640-square-foot apartment, were sold within three months.
    Some clients making down payments on their condominium units bring in stacks of kyat bills to pay, since property transactions are still cash-based, in what looks to be Asia's lucrative new neighbourhood.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2012. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register