Yangon realtors call for wide-reaching reforms

Yangon real estate agents are hoping the incoming government can breathe new life into the real estate sector, where sales have slowed over the past couple of years to a near-standstill, condominium units lie empty and a growing number of people areunable to afford basic accommodation.

Growth in the sector – and the ultimate goal of providing affordable housing for those who need it – has been blocked by archaic laws, land speculation, a lack of access to finance and reluctance on the part of the government and large local companies to give up their extensive holdings for anything less than a small fortune.

Following a boom throughout 2014 as well-connected companies scrambled to build luxury apartment blocks, sometimes with the help of foreign developers, the market since the start of last year has been frustratingly slow, with transactions grinding almost to a halt during the transition period, real estate agents said.

Their hopes are pinned on foreign investment and supportive policies, which they believe have the potential to redistribute wealth. Land prices have risen to unsustainable levels under the outgoing government – much higher than in neighbouring countries, said U Khin Maung Aye of Shwe Kan Myae real estate agency.

While U Thein Sein’s administration was unable to control the problem, the new government may be able to make a difference, he said.

“The outgoing government didn’t control prices, which is why the market is bloated and rich people have been able to grow richer and richer through speculating. We expect the incoming government will exert some control,” he told The Myanmar Times.

Much land in Yangon is still controlled by the government, which attaches a high value to its property, said Daw Moh Moh Aung, general secretary of Myanmar Real Estate Services Association (MRESA).

“The State owns a lot of land, and values it at a high price when it tenders it out to private companies. No [private landowner] will ask for a lower price than the tender price set by the government. We should question who is setting those prices,” she said.

A lack of alternative investment options has pushed speculators into real estate, she added.

“I think the new government will want to control property prices, but my opinion is that it should open up the market to investment before forcing prices down,” she said.

Property experts said they expect the new government will focus on providing affordable housing – perhaps not in the downtown area, but in the city’s mid- and uptown areas.

The National League for Democracy’s economic manifesto says little about its real estate policies. Under a section entitled “urban” the party pledged todevelop public transportation systems, renovate urban infrastructure and establish an “urban greening programme”.

It also plans to establish, “as quickly as possible, a programme for the rehousing of homeless migrants, who have moved to the cities as a result of natural disasters, economic opportunities, and land confiscation”.

This suggests it will focus on providing low-cost housing, a service the outgoing government has been unable to offer many of the city’s landless residents.

Others see foreign investment as a good way to shake up the industry. Foreign investment into mid- and lower-end estate real projects could add to supply and force prices to fall, though this would need to be accompanied by the development of a mortgage market.

“We expect a lot more foreign investment into projects such as condominiums, which will lift demand and help the market to return to normal, which is why we hope the new government will handle the market well,” said U Khin Maung Aye.

Foreign investment into other sectors could also help the property market by creating a new need for office space, and bringing in new renters and buyers, he said, adding that the new Condominium Law passed earlier this year is likely to improve demand.

The law allows foreigners to buy up to 40 percent of units in any residential tower, opening real estate to overseas buyers for the first time.

For Daw Moh Moh Aung, the future of Yangon real estate relies on foreign investment.

“Under the U Thein Sein government there were some foreign investments, but only a handful, and most were joint ventures with the government. I hope the new government will pass strong laws that will encourage much more international investment, to rejuvenate this listless property market,” she said.

Prices in the rental market at least are falling, though a realtor at Win Shwe Wha estate agency said there have been few transactions during the transition period to a new government.

“The price of condominiums which previously rented for more than K3 million [a month] is falling. Houses which rented for US$10,000 last year now cost $7000,” she said.


Source: Myanmar Times

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