Developers failed to launch a single new condo project in Yangon in the second half of 2016, as developers went ‘back to the drawing board’ in response to weak sales, the real estate firm Colliers International has said in an update.
It followed a ‘significant’ drop in new sales launches in the first half of the year, with only five new projects bringing 1,673 units. Overall, launches were down 41 percent from the previous year, reads the report.
“Some developers are now back to the drawing board, reviewing repositioning strategies and considering foreign capital injection,” the company’s Myanmar based researches said.
The total number of completed condos exceeded 6,000 last year, and Colliers predicts strong supply in the coming year with more than 10,000 units in the pipeline. But buyers aren’t matching supply, and a rise in defaults from customers could see projects delayed or cancelled.
Developer confidence has also taken a hit in the wake of the Yangon City Development Committee’s (YCDC) controversial high-rise construction review, which saw projects temporarily halted across the city.
But that was only a contributing factor to the sector’s minimal growth, Colliers said. Developers will now proceed with caution as they wait for a ‘solid’ regulatory framework from the government.
Meanwhile, buyers have shown interest in more competitively priced condos, with the mid-tier sector seeing a 2 percent increase in sales in the second half of the year, and a 14 percent increase year-on-year.
The introduction of more mid-level condos in the past year saw prices drop by 11 percent, and Yangon could see even more competitively priced condos enter the market on the back of a fall in land prices, Colliers predicts.
“Landlords are becoming more willing to accept more realistic valuations. This should pave the way for the entry of developments offering more competitive prices that are geared towards genuine demand.”
Source: Myanmar Business Today
