Epic state auction hushes market

The big sell-off has finally arrived. The Privatisation Commission, charged with auctioning state-owned enterprises, on February 13 released a list of 268 sites that will be sold off nationwide, with a final bid submission date of February 24.

There are 157 properties in Yangon up for grabs, including many in Bahan, Yankin, Insein, Hlaing, Mayangone, Thingangyun, Kamaryut, Mingalar Taung Nyunt, South Okkalapa, North, East and South Dagon and Sanchaung townships, the state-owned Myanma Ah-lin newspaper reported on February 13.

The properties to be auctioned in Kyauktada township alone cover at least 36,500 square feet. Using a highly conservative estimate of the value, based purely on the footprint of the buildings and taking a below-market estimate of K500,000 a square foot [see Page 11 for more information], the value of the seven properties to be auctioned in Kyauktada township is more than K18 billion, or US$18 million.

Included in the list of sites in Kyauktada township is 379/383 Bo Aung Kyaw Road – The Myanmar Times’ office – that is owned, for now, by the Ministry of Commerce. The three-storey building’s footprint is an impressive 9840 square feet.

Privatisation Commission regulations state that buildings which are auctioned off must continue to be used by the new owners for their original purpose – ice factories must continue to make ice, rice mills must keep milling rice and so forth. However, what that means in terms of former ministry headquarters and office blocks remains unknown, particularly with regards to a 6.6-acre block on Sein Lei May Avenue Lane, in Yankin township opposite Inya Lake that would likely make an excellent site for a hotel.

A real estate agent based in Tarmwe township said the announcement of the auction, which could reap hundreds of millions of dollars, had brought the market to a standstill.

“The privatisations usually occur towards the end of the financial year, which is March 31. The affect [the auctions] have is more or less the same every time: They significantly detract attention from the normal market because potential buyers wait to see the outcome of the auctions,” he said.

“It’s clear that this auction, unlike the last one announced at the end of January, has an extensive amount of properties in excellent locations. This is certain to attract the attention of buyers with deep pockets,” he said.

He added that the impact of the auction would be felt for months to come.
U Min Min Soe, from Mya Pan Tha Khin Real Estate, said the privatisation announcement has hit the high end of the market.

“Since the auction was announced there has been a significant decline – perhaps as much as 60 percent – in customer enquiries for high-end properties worth K1 billion [at least $1 million] or more,” he said.
“This time around the Privatisation Commission is auctioning numerous properties that will be of great interest to investors.”

However, a spokesperson for Unity Real Estate said the auction would only hit a small section of the real estate sector.

“Unlike in previous auctions, there are no factories, hotels or cinemas in this batch, which reduces the scope of the properties up for sale. This auction is mainly old government buildings and apartments.
“But the main reason that it will only affect a small part of the market is price – most of the sites are going to fit into the top 10pc of the price range. They are probably going to be extremely expensive and well beyond the reach of the majority of people,” he said.

Previous auctions have included the 246 former Myanma Petroleum Products Entreprise fuel filling stations, factories, hotels and wharves. The auction brings the total number of former state-owned assets sold during the 2010-11 year to more than 600.

Source: Myanmar Times

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