Shwe Taung Group of Companies yesterday launched a mixed-use project worth US$300 million in the centre of Yangon, demonstrating that the local conglomerate has shaken off its controversial past to emerge as a viable partner in the eyes of many international investors.
Junction City, designed by DP Architects from Singapore, will include a five-star hotel to be operated by Pan Pacific Hotels and an office tower to be developed in collaboration with Singapore’s Keppel Land, in addition to a shopping centre and serviced apartments.
For many years, U Serge Pun’s Yoma Strategic was the go-to partner in Myanmar for international developers but this is beginning to change as local competitors ramp up their branding and international reach.
The pool of prospective partners remains limited, as many of Myanmar’s most experienced developers, such as Asia World Group and Htoo Group, are still subject to a wide-reaching US sanctions program.
This leaves non-sanctioned groups such as Kanbawza Group and Shwe Taung – both of which were formerly under Western sanctions – free to reap the rewards of staying on the right side of the US Treasury Department.
Shwe Taung’s new landmark project, Junction City, is being built on a 6.5-acre site on the corner of Bogyoke Aung San and Shwedagon Pagoda roads, in downtown Yangon. The group began construction last year, after receiving Myanmar Investment Commission approval.
The project is 35 percent complete, said U Aung Zaw Naing, CEO of the group’s development arm at the launch yesterday.
It is being built under a profit sharing agreement with landowner Yangon City Development Committee, under build, operate, transfer (BOT) terms of 50 years with two 10-year extensions.
“We applied for the YCDC tender in 2012 and in 2013 entered into a joint venture agreement, in which we have a 49 percent share,” said U Aung Zaw Naing.
The company paid a K12.08 billion one-off payment to YCDC, and will pay a fee of K5.8 billion per year, from the profit it makes on leasing the completed buildings. YCDC will not be involved in developing or running the project.
The development will have a built-up area of around 260,000 square metres. Phase one includes the 348-room Pan Pacific operated hotel, an office tower developed with Keppel Land and a shopping centre to be managed by Shwe Taung Property Management.
“This phase will be finished in 2017. It will have three buildings – a 25-storey five-star hotel, a 23-storey office tower and a five-storey shopping mall. The office tower and shopping mall will be completed in the first quarter of 2017 and the hotel in the third quarter,” said U Aung Zaw Naing.
The office tower will be built by a joint venture owned 40pc by Keppel Land, 55pc by Shwe Taung Junction City Development and 5pc by City Square Development (CSD) Company. The hotel is 20pc owned by Pan Pacific Hotels Group, 51pc by CSD and 29pc by Shwe Taung Junction City.
The shopping centre, which will include Myanmar’s first IMAX-ready theatre, is a joint venture between CSD, which owns 51pc, Junction City with 39pc and New Asia Investments, a special purpose vehicle incorporated in Singapore, with the remaining 10pc.
Once phase one is complete, Shwe Taung will build the second phase, including serviced residences, to be finished in 2019.
The entire project will cost around $300 million, said U Aung Zaw Naing, adding that Shwe Taung Group is in talks with international banks such as Singapore’s United Overseas Bank and Oversea-Chinese Banking Corporation for funding.
He said the project will be “a pioneer in green design and sustainable development in Myanmar”, which will meet the Green Mark standards of the Building and Construction Authority of Singapore. These include solar panels and recycling rainwater.
The company will also rebuild a pedestrian bridge across Bogyoke Aung San Road, and build a new bridge with escalator access. It will also build a carpark with 1500 spaces – one of the largest in Yangon.
“The project will create job opportunities for 8000 local workers during construction and around 4000 people once the project is complete,” said a spokesperson for New Asia Investments yesterday.
Ng Ooi Hooi, president of Keppel Land’s regional investments, said the company had been in Myanmar since 1990, when it first began to operate Yangon’s Sedona Hotel. “Gross domestic product is likely to grow by up to 7pc a year, so this is a very good reason to continue investing,” he told The Myanmar Times. “Steady growth is one of our key measures for making investment decisions, and we plan to invest long-term in Myanmar property.”
Kevin Crosley, senior vice president of marketing for Pan Pacific Hotels said he believes the hotel will be
profitable. “This depends on supply and demand,” he said. “Recently there has been a significant increase in supply compared to the last three years, but Yangon is likely to be a major tourist destination for many years to come.”
Daw Sandar Htun, managing director of Shwe Taung Property Management told The Myanmar Times that Junction City Shopping Mall has plenty of room to grow. “The shopping centre industry in Myanmar remains very small compared with other countries, and I predict a lot of future demand,” she said.
“In other countries, shopping malls are 10 times bigger than in our country. We need to build them bigger and better.”
Source: Myanmar Times