The real estate sector is in the doldrums after the boom that followed the 2010 election but market sources are hoping for better times after the change of government.
Real estate prices in Yangon skyrocketed after the 2010 election, buoyed by hopes of an economic boom after decades of stagnation. After peaking in 2013-2014 the market has followed the old truism that what goes up must come down, say Yangon real estate brokers.
The property market has been subdued since late 2014 for a number of reasons. In the last months of 2015, some property owners could no longer hold out for top prices and sold at below market rates, said Sai Khung Noung, who owns the Sai Khung Noung Company, a realtor.
“The market culture here is that people are eager to buy when the prices are rising, but they don’t buy when they are falling,” Sai Khung Noung told Frontier. “So, the prices are falling now, which is why people recoil from buying. The real estate market is not like gold market because it is not linked with international rates.”
Ko Nyi Nyi Zaw from the Real Estate Doctor services company told Frontier there was no demand for properties priced over K50 million (about US$38,500). Apartment rents were also falling, he said.
Sai Khung Noung said one reason for the slump was that investors were waiting until the installation of the National League for Democracy government. Another was that most condominiums were built on government-owned land under build-operate-transfer contracts that require the return of the property to the government after 50 or 70 years. This meant that condominiums and apartments had become more difficult to sell than vacant land. “At first, the people did not fully understand the BOT contracts for condos but now they do, so condo sales are dull,” Sai Khung Noung said.
Some real estate brokers cited the halting of a luxury high-rise condominium and other projects on formally military-owned land near the Shwedagon Pagoda as another reason for market anxiety. The government decision to halt the projects followed claims they could affect the structural integrity of the nation’s most revered Buddhist site. Alternative sites were promised for the developers but the change in plans has been costly and chaotic for them.
Media reports say the 68 Resident condominium project being developed at the corner or Kaba Aye Paya and Saya San roads by prominent gold dealing company Shwe Na Taw also faces the threat of being halted. The News Watch journal has quoted Yangon City Development Committee (YCDC) member U Khin Hlaing as saying that he wanted to stop the project because it breached the city’s requirement that buildings cannot be taller than the Shwedagon Pagoda.
But there’s reason for optimism. Daw Moh Moh Aung, the secretary general of Myanmar Real Estate Services Association, told Frontier she believed that after the condominium law was passed the market would warm up again because the legislation would allow foreigners to buy condominiums.
“Myanmar is much more predictable post elections, which is helping people make decisions, rather than wait and see,” said Balaji Ramaswami, the managing director of real estate services website, House.com.mm. “After the new parliament gets operational, we can look forward to a vibrant market,” he said.
“It’s because people can see a government for five years ahead, and predict better. This would help people take good decisions. Removing uncertainty definitely helps business.”
Sai Khung Noung and Daw Moh Moh Aung said that they expected an improvement in policy stability under an NLD government that would also lead to better market conditions.
But there is still international instability to factor in. Real estate service companies fear that the collapse of China’s stock market and the impact of such a development on bourses in Southeast Asia could have a negative impact on property prices in Myanmar.