Emerging Asia can be a tough place for foreign nations to own real estate. As it stands in many countries, non-citizens are prohibited from buying properties. For example, in the Philippines, the country’s constitution bans non-Filipinos from owning land and in Sri Lanka non-citizens pay more tax when they own any property. However, there are signs that this may be about to change. 2015 will see countries in the Association of Southeast Asian Nations (ASEAN) merge to form a single market.
The establishment of the ASEAN Economic Community, or AEC, is expected to boost foreign direct investment in the Philippines and other untapped markets across the region, putting pressure on lawmakers to amend these ownership restrictions. This year, foreign ownership laws will also come into focus elsewhere in Asia, with debate set to continue in Indonesia and Myanmar about opening up the countries’ property sectors to international investors.
This is a sign of relief for real estate agents in some countries like Myanmar, which sees a lack of foreign investment to be one of the top 3 major constraints on the property market. A recent study conducted by House.com.mm revealed that 24% of house hunters and real estate agents identified lack of external investments as a factor that prevents the property market from skyrocketing.
As a country, Myanmar has become increasingly attractive to foreign investors. Foreign Direct Investment (FDI) grew from $US 1.9 billion in the 2011-12 financial year to $2.7 billion in 2012-13. The bulk of this investment was directed towards the energy sector, garment industry, information technology and food and beverages, according to the World Bank.
In terms of real estate, non-nationals face heavy restrictions on buying property in Myanmar. According to Article 31 of the Foreign Investment Law, foreign investors can lease land for up to a 50-year period. However, recent government initiatives provide some encouragement for property investors, including a draft Condominium Law which would allow developers to sell up to 40 % of condominiums on the sixth floor or above to international buyers.
The outlook for property investors is already improving. Fueled by the ongoing reforms, the majority of local brokers surveyed by House.com.mm have noted an increase in investment in the sector in recent years. Overall, economic development is seen as the biggest driver of the increase in investment, according to House.com.mm data.
Another reason why Myanmar is increasingly attractive for investors is developments in the tourism sector. The Ministry of Hotels and Tourism aims to increase international arrivals to 3.01 million in 2015 and 7.48 million by 2026, presenting a significant opportunity for property investors in the hospitality and holiday rental markets.
Given all the above aspects, and the general low purchasing power of Burmese people, there is definitely enough room for outside investors. Myanmar foreign ownership of real estate should benefit the country as a whole.