Presidential adviser U Aung Tun Thet sees no property bubble and predicts daily ‘flipping’ will occur
There is no bubble in the property market and prices of land will continue to rise for the next few years, presidential adviser U Aung Tun Thet told a seminar to mark the first anniversary of the Myanmar Real Estate Services Association on July 7.
Property “flipping”, in which properties are bought and sold on the same day, is likely in the future, he added in a talk called “Future Prospects of the Property Market in Myanmar”. Flipping could lead to competitive prices, he told the seminar at the Union of Myanmar Federation of Chambers of Commerce and Industry..
“We’ve seen that property price have reached twice the prices of neighbouring Thailand,” he said, pointing to industrial zones near Yangon like Hlaing Thar Yar where an acre of land sells for US$530,000 – 12 times higher than a similar plot in Orlando, Florida.
Noting that office rents have tripled between 2011 and 2012 to $65 a square metre, he predicted they will more than double again, to $150 a square metre, by 2015.
The low supply of condominium units and serviced apartments in central Yangon will continue to drive their rental prices above Bangkok levels, U Aung Tun Thet predicted.
He said high property prices are the result of the reforms implemented by the current government, which have attracted foreign investors. “Sanctions are easing on Myanmar and this is the major factor attracting investors to the property sector,” he added.
Although Yangon has only 1850 high-end hotel rooms and 740 service apartment units it is aiming to attract around one million visitors this year. With only about 680,000 square feet of office space in Yangon, it makes sense to invest in more office space now to meet demand from rising foreign investment, U Aung Tun Thet said.
The presidential adviser also called for more focus on urban planning, zoning and infrastructural development, including in industrial zones.
“In foreign countries, industrial zones include electricity and internet access, but here industrial zones are just bare plots.”
He said that Myanmar’s transformation to a more open economy will prevent a property bubble as more channels for investment emerge and the city expands.
However, Dr Myo Thet, the general secretary of UMFCCI, told the seminar that the high price of land is a barrier to development and called on the realtors’ association to help contain surging prices. He also said the association should open a call centre to provide reliable data on prices to foreign investors.
Association president U Khin Maung Than said that the association now has more than 1500 members and that it aims to ensure all of them are certified and qualified.
U Aung Tun Thet said realtors could not be blamed for rising prices. “That kind of thinking shows a lack of understanding of business. It is all about supply and demand,” he said before describing advertisements for housing.
“Today, I saw many property advertisements that offer fully furnished penthouses in Yangon for $15,000 a month and also houses in Golden Valley for $10,500. The ads show how rental prices have gone through the roof,” U Aung Tun Thet said.
However, he added, the fact that hotel chains from around the globe are investing in Myanmar is a positive sign for the property market.
“Many investors arriving means an expanding market.”
“The first question foreign investors ask when they come to Myanmar is, ‘Are huge land plots available?’ Because our country has limited land one thing is certain: prices will surely go up. Are land prices a barrier for foreign investment? This is a question investors are asking,” he said.
Although the property market is largely speculative, with jade traders pouring their profits into it, a vast undersupply of housing, office space, industrial land, hotel rooms and retail space will keep prices moving upward for the foreseeable future, the presidential adviser concluded.
Source” Myanmar Times
Learn about the Office Rental and Service Office Market in Yangon at The State of Service Office Business in Yangon
