Sentiment in Mandalay Property Sector Dampened by High Tax Rates

While homes priced between K50 million and K100 million have been selling relatively quickly in Mandalay, demand for properties priced beyond that bracket has been lackluster, property brokers in Myanmar’s second largest city said.

Since 2011, demand for investment properties in Mandalay has been slow, and most buy cheaper properties for residential purposes. That has dampened sentiment in the Mandalay property sector, said U Wunna Soe, director of Pho La Min, a property agency.

The main reason is high tax rates. “If you want to buy K300 million property, you have to pay a third of the sales price in taxes, which is an additional K100 million. That is why buyers are afraid of buying high-priced property. I think the current tax rate for property should be reconsidered”, U Wunna Soe said on August 5.

Currently, the property tax rate is 15 per cent for properties priced between K1 million and K30 million, 20 pc for properties priced between K31 million and K 100 million and 30 pc for properties above K100 million.

The current tax rates have been in place since 2016 in accordance with the government’s new Union Tax Law.

Prior to that, the tax rate was just 3 p for properties priced up to K100 million, 5 pc for properties priced between K101 million and K 500 million and 10 pc for those priced between K501 million and K1 billion. Previously, buyers were required to pay the maximum tax rate of 30 pc for properties above K1.5 billion.

The other reason for lower demand is general skepticism after property prices crashed in 2014. “In the past, there was a lot of interest in the property market and many buyers wanted to invest in the property market. That led to a jump in property prices in a very short time,” said U Wunna Soe.

“The market has obviously peaked since 2014. Currently, we are seeing mainly genuine property buyers coming into the market and investors are very rare. Now, many property owners are no longer holding out for higher prices and are prepared to negotiate with interested buyers.”

U Aung Win, a freelance property agent in Mandalay, agrees. “It has not been easy to attract investors to the property market. It has been especially hard to generate interest in the high-price properties,” he said.

“We have to rely on selling low-to-mid-priced properties to those who are buying for residential purposes, which is slower, to get by.”

According to an updated release by the Mandalay Region Government Office, for the 2016-17 fiscal year, the most expensive properties in the city were located in the Myothit (Newtown) 1 area, where the price for one acre of land is K1.89 billion to K1.98 billion.

“The highest demand for property is now in Chan Mya Tharsi township, Pyigyi Tagon township and Maha Aung Myay township”, U Wunna Soe said.

Source: The Myanmar Times

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