Real Estate Sector to Pick up on Back of Foreign Demand

Demand in the Myanmar real estate market is expected to pick up in 2018 now that the rules to the new Condominium Law have been released. Under the new rules, property investments by foreigners are expected to spike, said U Aung Naing Oo, secretary of the Myanmar Investment Commission.

The rules, which were released in December last year, will allow foreigners to purchase and own up to 40 percent of the units in a condominium block. This is expected to generate interest and spur more buying activity, agents said.

The new rules also arrive at a time when the government is expecting foreign direct investments (FDI) as well as the number of incoming foreigners and expatriates to rise in the years ahead, now that rules to the Investment Law have also been released and the new Companies Law approved.

That confluence of new legislation will generate more demand for all types of Myanmar properties, from residential units and services apartments to office space and industrial factories, said U Nay Min Thu, managing director of iMyanmarhouse.com.

After peaking in 2015, property prices in Myanmar have since fallen by about 30 percent as buyers and investors awaited the release of the rules, which came more than a year after the Condominium Law was approved, agents said.

This year, demand for modern lower-tier apartments and condominiums which are smaller in size and more affordably priced compared to larger scale projects, is expected to rise, according to property consultancy Colliers International. In particular, small-scale developments in the immediate outskirts of Yangon are expected to generate high levels of interest.

Indeed, more condominium developers are expected to secure bank partnerships this year. Protective measures, such as buyer’s legal security under the new condominium rules, will entice banks to more readily extend mortgages. Colliers also suggested that banks should offer more reasonable mortgage terms and partner with lower-tier developments in addition to high-end projects to maximise lending.

The condominium projects expected to be complete this year are Phases 2 and 3 of Golden City, Kantharya Centre, IVY Condominium, Royal Sayarsan Condominium, San Yeik Nyein Condominium, agents said.

Mixed use demand

Meanwhile, demand for hotels, serviced apartments as well as office and industrial space will rise. Growth in apartments for rental purposes such as serviced apartments is likely, Colliers said. “The current limited supply of such units should yield opportunities for many developers,” it noted.

More tenants will upgrade their office environment and relocate to better offices. In addition, further clarity in economic policies and quicker reforms will create an impetus for new market entrants as well as for business expansion, Colliers said. As such, demand for new office space will rise.

Mixed development projects are likely to gain traction. Already, Singapore-listed Yoma Strategic Holdings has signed an agreement to build Yoma Central, which will feature Peninsula-branded luxury residences, two Grade A office towers, a business hotel and serviced apartments.

The project will be developed under Meeyahta Development Ltd, a joint-venture between Yoma Strategic, First Myanmar Investment Co (FMI), several companies under Mitsubishi, the International Finance Corporation and the Asia Development Bank.

Yoma will also restore the former headquarters of the Burma Railway Company restored into a luxury hotel called Peninsula Yangon together with Hongkong and Shanghai Hotels and FMI. Both projects will occupy a10-acre site near Bogyoke Aung San Road, not far from Junction City, and are expected to be complete in 2021. The combined contract value is over $400 million.

Meanwhile, construction of phase 2 of the Junction City mixed development project, comprising serviced residences and office towers, will also begin in 2018. Phase 1 of Junction City, which comprises a shopping mall, grade-A office block and the Pan Pacific Yangon hotel, was completed in December 2017.

Mixed use developments are also expected to take off in Mandalay city, with “big-ticket projects soon to be revealed,” Colliers said.

 

Source: Myanmar Times

 

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