The sale of units in built-operate-transfer (BOT) housing developments has slowed almost to a standstill, as buyers grow increasingly wary of the risks, according to commentators.
In 2011, ministries began to tender land, with a view to developing the plots through public-private-partnerships. These were known as BOT contracts. Typically, the tender winner agrees to rent the land from the government for 50 years, with an option to extend the commitment twice, by 10 years each time. When this time is up, the land must be returned to the government.
Several tender winners are now redeveloping the land into luxury condominiums.
Many developers sold units without explaining the details of a BOT contract, so customers didn’t understand the system well, said U Zay Thiha, vice president of Zaykabar Company. As a result, the trust between developers and buyers has been broken, he said.
“If the developers were truthful and told buyers that the projects would have to be given back, nobody would buy. If these developers want to sell, they should only sell a permit to stay in the apartments – not ownership,” U Zay Thiha explained.
“Instead, BOT projects are being sold at the same prices as projects on privately owned land: around K300,000 per square foot. The difference has not been made clear; that is why customers are confused. The prices should be lower than this for BOT projects, and customers should not be cheated,” he said.
Now that buyers know the apartments will not be theirs forever, the popularity of BOT projects has fallen and sales are silent, said Myanmar Real Estate Services Association’s general secretary Daw Moh Moh Aung.
“Myanmar people believe that if they buy a house it should be something they can pass on to their children, so they prefer to buy housing on privately owned land,” she explained.
U Sai Khon Naung, general manager of Sai Khon Naung real estate agency and construction company, said, “Another problem is that companies tell buyers their contracts with the government last for 70 years, but none of them are willing to show buyers these contracts.
“According to the BOT system, the projects may have to be given back to the government after 50 years, depending on decisions made later on,” he added.
Daw Moh Moh Aung urged customers to agree to buy a property only after they have read the contract thoroughly, adding that developers with BOT land should reduce their prices.
In the future, if contracts are more transparent, it will boost BOT sales, said U Zay Thiha.
“If contracts state that the buyer has permission to stay for 60 years, the market is likely to improve. But now, the public don’t trust any BOT projects, and this is affecting the entire market,” he said.
Source: Myanmar Times