Aug 13, 2012

CB Bank outlines $2 billion Mandalay ‘new city’

A PRIVATE bank last week unveiled plans for an ambitious 20,000-acre, US$2 billion mixed use property development about 15 kilometres south of Mandalay but warned it will cancel the project if it cannot reach reasonable compensation agreements with landowners.
U Khin Maung Aye, president of Co-operative Bank (CB), said the proposed New City Project is near the ancient city of Inwa, about 16 kilometres (10 miles) south of Mandalay.

While the government is yet to approve the proposal for the project, CB Bank on August 4 formed a public company to oversee the development and invited investors to express interest in purchasing shares in the venture. More than 250 people submitted share application letters on the day but U Khin Maung Aye warned that progress is not certain because of high land prices.

“We are going to negotiate with the landowners about the price. The project aims to have a good outcome for all and we want to look after the farmers. Most of the area is not farmland but if the negotiations over land sales are not acceptable then we will cancel the project,” he said at the launch ceremony in Mandalay on August 4.

“This will create job opportunities, and migrant workers and those in border areas could potentially come back to work here.”

The launch came after U Khin Maung Aye met members of Mandalay’s business community in June to pitch the development, which the company expects could take 10 years to complete. If it gets permission from the government for the project, it will sell shares for at least K10,000 each. Individuals who buy K1 billion (US1.2 million) of shares will have the chance to get a seat on the board of directors, U Khin Maung Aye said last week. CB Bank will also be an investor in the project.

Another member of the public company said that the government must ensure the new land laws are properly enforced when the company tries to acquire the 20,000 acres needed for the project. The land is beside the Ayeyarwady River in Tada-Oo township and the site was selected because of its proximity to the Yangon-Mandalay Highway and Mandalay International Airport.

CB Bank envisages the project will feature waterfront housing, a hotel zone, riverside recreation areas, an industrial zone, retail and warehouse areas, a trading centre and education facilities.

Real estate industry sources said last week that farmland prices in Tada-Oo township near Inwa had risen tenfold since March – from about K1 million to K10 million an acre – when rumours began spreading about the project.

But real estate agent U Aung Soe said speculators were also concerned that owners of land in the project would receive minimal compensation if the project goes ahead.
“I have also bought 30 acres in Tada-Oo township for a mango plantation but it’s not in the project area and I don’t dare buy any land in the project area now because it’s not certain to make a profit,” he said last week. “We can’t know how the project will move forward, particularly if compensation will be paid for land acquired. I don’t think we can expect too much.”

“But the project sounds plausible and the hotel zone would be well located because it’s close to the airport … it is also a chance for both small and big entrepreneurs [to invest].”
U Thein Tun, president of the Brokers, Traders and Millers Association of Mandalay, said it was “an interesting project” but given the lack of the government approval there was not a lot of confidence yet that it would “become reality”.

“But it’s so big that residents can’t really believe yet that it’s going to eventuate. If it does become reality, I expect most entrepreneurs will participate or buy shares,” he said.

Source: Myanmar Times