Real estate is likely to bounce back in 2016 after more than a year of depressed sales, while prices will fall as new supply comes online, said investors and agents.
Following a relatively smooth election, the volume of transactions will be “back to normal”, they said, referring to last year when the industry was thriving.
“There will be more transactions, but for that to happen, prices need to come down,” said U Nay Min Thu, managing director of property website iMyanmarHouse.com.
Land and property prices in Yangon had in some instances risen to match those of Hong Kong and New York, leading to a drop in sales, while owners held out in case the market rose yet further. Uncertainty about the election and the potential for new taxes also cooled sales.
For U Nay Min Thu, a likely rush of investment following the transition to a National League for Democracy government next March will boost the real estate sector, as multinationals look for both office and residential space.
“We estimate that there will be much more buying and selling next year, but that prices will fall by 10 to 15 percent,” he said.
Thousands of new condominium units are scheduled to come online next year, which will force down prices, he added. Furthermore, if the regional government pushes ahead with plans to develop seven “new cities” around the outskirts of Yangon, prices will fall further.
The launch of Yangon’s first modern stock market at the end of this year will also help to cool real estate prices, said U Tin Maung, chair of Mandalay’s Real Estate Agent Development Association.
In the past, investment options in Myanmar have been limited to real estate, cars, US dollars, gems and gold. Capital will flow out of the property sector as companies begin to list on the stock exchange, and a bond market develops, he said.
“In our country businesspeople have few investment options. The car market fell last year and the price of gold is unstable, so real estate has remained as the only attractive option.”
U Sai Khon Naung, managing director of Sai Khon Naung real estate agent said prices may not fall too far, if transactions pick up and demand increases.
“Prices rose over the past few years as a result of many transactions. I own real estate myself and I believe it’s a very good investment,” he said.
Investors say they also hope the new government will pass supportive rules and regulations. “It’s not easy for many people in Myanmar to own a house or an apartment, but if the government restructures the property law, it will really help the market,” said U Tin Maung.
Source: Myanmar Times