Buyers have the upper hand in beleaguered condo market

The Myanmar condominium market has developed considerably on the back of changing demand trends in recent years.

These days, buyers are looking beyond location and price. They’re now taking size, nearby amenities and resale value into account when purchasing a new condo. The evolving trends could jumpstart growth in the ailing condo market and mark a turn in the residential property cycle.

Before 2010, properties were categorised as condominiums if they were between 2,000 sq m and 2,500 sq m in size and had a minimum of three bedrooms. Demand has changed since then, and new condo developments now come equipped with additional sports and recreational facilities as well as security.

More recently, condos are being included as part of mixed development projects. One example is the Golden City project in Yankin township comprising condos and office units as well as an upcoming shopping mall and hotel which will be complete next year.

By incorporating condominium units as part of the project, its developer, Golden Land Real Estate Development Company, is able to secure better residential demand from foreign tenants occupying the office blocks who want to live close to their workplace. These include CITIC and potentially, the Bank of China.

Golden City condo has also drawn interest from residents in Yankin as well as local buyers from other parts of the region. One reason is because the development is located near several schools. Another is the convenience of having a shopping mall within walking distance from home. Yankin is also viewed as a middle-to-upper class township, making it an attractive area to own property.

Size matters

Developers are also building condos of different sizes to meet and generate more demand. For example, there is now the option to buy 1-2 bedroom condominium units starting from 400 sq feet up to 1,000 sqft, whereas in the past, condos were usually built up to 3,000 sqft. This gives investors more opportunities to rent out their condos to single expatriates or those with small families.

Currently, about 15 percent of existing condominiums in Yangon comprise of smaller units, but that is expected to grow. “Demand for small units is much higher than for the larger ones,” said Ko Kyaw Sithu, sales director at Golden Land Real Estate Development Company.

He pointed out that all the 1-2 bedroom units at Golden City are already sold out. “The smaller units attract much more buyers because they are less costly and the return on investment for two-bedroom units is also higher,” he added.

Condo prices vary according to size and floor level. At Kan Be Tower, an upcoming condo project in Yankin, units are valued between K240,000 and K270,000 per square foot. A two-bedroom unit at Kan Be Tower will set buyers back by K210 million-K230 million, while three bedroom units are between K270 million and K290million. Meanwhile, renters are looking at US$1,800-$2,000 per month for similar units.

Since March 2016, when units at Kan Be Tower were made available for sale, up until August this year, 180 units at the development have been sold. Another 130 units are expected to be sold by year end.

Good potential?

Payment options for buyers have evolved too. Now, the banks are offering 5-10 year mortgage plans to help buyers afford property. “That is a positive sign. Even though the mortgage process is not as mature as other countries, it is a step closer for Myanmar people to afford condos,” said Alex Lee, vice general manager at Golden Land Real Estate Development.

Ye Tun Maw, property sales manager from Success Property Consultants said “as developers and banks cooperate to offer payment solutions like long term home loans, the condo market will bounce back and prices will stabilise.”

Mr Lee from Golden Land Real Estate Development said the bulk of demand is now coming from local buyers. “Currently, we are selling mainly to local buyers, including those now working abroad who want to come back and settle down in the future,” he said, adding that demand from foreigners is less than 10pc of total sales.

As the new Condominium Law is gradually enforced, enabling foreign buyers to acquire up to 40pc of the total floor area of a condominium building, Mr Lee reckons demand will soon expand toi absorb available supply, paving the way for more stable prices within the next 1-2 years.

Developers have anticipated more growth in foreign demand and are building ahead. According to data from Colliers International, the future stock of condo units appears likely to remain substantial with more than 10,300 units due for completion in Yangon between 2018 and 2020. Of these, nearly half are expected to come onstream this year.

Selling prices have “further trailed a downward path.” That makes it a good time for buyers looking for property. As at the end of Q1 2018, weighted selling prices in Yangon ranged between US$1,458 and US$2,958 per sq m per month, according to Colliers.

SOURCE: MYANMAR TIMES

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