Thursday, August 09, 2012
No matter that the apartment and condominium market here in the
dilapidated capital has been stagnant for 15 years, by the company’s
reckoning, and that foreigners in Myanmar are not permitted to buy homes
or land.
“We’re turning a chapter in the market, and I say this quite bullishly,” Mr. Hlaing said.
The company is selling units to Myanmar citizens, and, Mr. Hlaing added,
it is paying close attention to rumors that the government is
considering opening the condominium market to foreigners this year.
“We’re very conscious of our popularity with foreign buyers,” he said.
In the past two years the government has enacted sweeping changes,
including ending the house arrest of the democracy activist Daw Aung San
Suu Kyi and allowing the elections that put her into Parliament. In
recent weeks the United States and the European Union have eased
longstanding economic sanctions that had prohibited American and
European companies from doing business in Myanmar.
International businesspeople seeking investment opportunities are
flocking to Myanmar “in droves,” said James Finch, a partner at the law
firm DFDL, which has an office in Yangon as well as in other Southeast
Asian capitals. “I expect there to be a push to develop much property in
Myanmar, fueled by funds from outside.”
Dozens of foreign companies are opening offices here and will need
housing for their expatriate employees, but there is less commercial and
residential property available in Myanmar than there was in Vietnam,
Cambodia and Thailand when they were at comparable stages of
development, Mr. Finch said in an e-mail.
Yangon, with a population estimated at 4.3 million in 2009, is the
country’s main commercial hub. But according to a 2011 report by the
real estate group Colliers International, the city’s total office space
of about 645,800 square feet, or 60,000 square meters, is about half the
space contained in the largest office tower in Bangkok, the Empire
Tower.
Demand for hotel space in Yangon also has surged over the past two
years: An upper-end room that in 2010 cost less than 43,750 Myanmar
kyats, or $50, a night now costs more than three times as much, said
Tony Picon, associate director at the Colliers office in Thailand.
Demand for Yangon’s six serviced apartments also is “extremely high,”
Colliers reported last year, and Mr. Picon said in July that the
starting monthly rate for a serviced studio apartment, at 2.19 million
kyats, or about $2,500, is nearly double what it was just one year ago.
Development of Myanmar’s real estate market will follow a pattern, said
Damien Duhamel, a managing partner at Solidiance, a consulting firm
based in Singapore that advises Fortune 500 companies on emerging Asian
markets and that recently opened an office in Yangon.
First, developers from Singapore, South Korea and Hong Kong will
capitalize on Yangon’s economic boom by building new hotels and offices.
An apartment and condominium market oriented around expatriates will
appear 5 to 10 years later, Mr. Duhamel said, adding that he observed a
similar trend in Vietnam 20 years ago.
But Mr. Picon of Colliers said some developers were already renovating
properties and building new ones to meet expatriate tastes, which
typically involve small units and amenities like gyms, swimming pools
and backup generators. According to the Colliers report, a loosening of
property laws expected this year may allow some form of foreign
ownership of condominiums, along the lines of similar laws in Thailand
and Cambodia.
Mr. Picon added, however, that even if the law passed this year and new
accommodation was made available in coming months, the supply of hotel
rooms and serviced housing for expatriates would lag behind demand for
the foreseeable future.
Some expatriates may think Yangon “will be like Bangkok and that getting
a room is easy,” he said. “I have seen a couple of people’s eyes glaze
over when the reality hits during their visit to Yangon.”
In the longer term, analysts and developers say, a crucial question is
where in Yangon to build new apartments and condominiums. The city,
which has frequent electrical failures, is surrounded by rivers and
lakes and has a lot of undeveloped land on its periphery, especially
across the Bago and Yangon Rivers.
Researchers from Harvard University concluded in a study in March that
soaring property prices in Yangon’s city center could lead developers to
build on the city’s periphery. Land in prime areas already costs about
$50,000 per square meter, surpassing prices in downtown Bangkok,
according to Colliers.
Representatives of two Myanmar developers, Yadanar Myaing and Shine
Trading, said during interviews that developers were reluctant to build
on the outskirts because of a lack of infrastructure, like a network of
bridges.
Serge Pun & Associates is not fazed. Through its Myanmar subsidiary,
Thanlyin Estate Development, it is building its newest housing
development on former farmland about 10 kilometers, or 6.2 miles, from
downtown. The project, called Star City, can be reached from downtown by
car in about 30 minutes, but the trip involves crossing two bridges and
bumpy roads, so the company is planning a ferry service to offer a more
convenient commute.
Yoma Strategic Holdings, based in Singapore, financed 70 percent of the
cost of the land development rights for the project, and the other 30
percent came from a publicly owned affiliate of Serge Pun &
Associates called First Myanmar Investment.
According to Mr. Hlaing, the government typically offers land to
developers for housing projects but does not act as a developer itself.
Star City’s 20 apartment blocks, which will contain a total of about
4,000 one- to four-bedroom units, are scheduled to open in December,
though the riverfront property is still dotted with the concrete
skeletons of buildings. Condominiums, a shopping center and a golf
course are planned, and Mr. Hlaing said the complex would be finished by
2020.
Nearly all of the approximately 500 units put on the market so far, at
70 million kyats to 215 million kyats per unit, have sold, Mr. Hlaing
said.
On a recent afternoon at Star City’s air-conditioned showroom, Mr.
Hlaing said the Myanmar authorities were taking a “very keen interest”
in the development and saw it as a benchmark for future housing
projects.
But he also said, echoing the concerns of developers and analysts, that
an expected influx of foreign funds into the city’s growing property
market could create a bubble.
Foreign capital may flow freely into Myanmar as economic sanctions lift,
but it also could easily disappear, Mr. Hlaing said, adding, “The local
market is wary of that.”
Source: The New York Times
Posted in: investment,markets,politics,reports
