Construction Business Saddled by Debt, Competition

The construction business, a capital-intensive industry, is struggling as many developers have gone into severe debt, developers said at a conference.

At a forum on the situation of the construction industry held at UMFCCI, U Ko Ko Htwe, a major property developer who runs Taw Win Construction Company, claimed, “We are about K20 billion in debt. Some developers are over K500-600 billion in debt. Around 1986, it was possible to start a construction business if you had K50,000. Now it is impossible even if you have K10 million.”

Many people realised that construction is a profitable business, and many came in and consequently prices went up. But because of unethical practices in the industry, as well as uncertainty due to the political climate, the market cooled down.

U Ko Ko Htwe added, “Now the industry has practically stopped. Around 2011, as profits fell in the car and dollar markets, people moved into the real estate business. This led to stagnation when many inexperienced players came into the business. Prices skyrocketed to unprecedented levels.”

“Investors are appealing the government for assistance. The banks are also facing difficulties as developers turn towards them for financing. As the applications for loans grew the banks have less and less capital for loan applications.”

U Ko Ko Htwe proposed that the banks should finance genuine home buyers rather than the developers.

Market sources said that units priced at K500,000 per square foot have been reduced to even K200,000, but buyers still remain elusive.

Source: Myanmar Business Today

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