The Yangon real estate market is one of Asia’s least dynamic.

But the previous week brought about unprecedented weak performance in the property market. There wasn’t a single sale made in the whole city.

Representatives of several leading Yangon real estate agencies all agree Myanmar’s political instability is the main cause of halted deals. Most also acknowledge other factors they believe are harmful to the market.

Poor performance was universal across the entire real estate market. The size or type of property didn’t matter. A majority of investors have already ceased activities, but some still want to sell their properties for some quick liquidity.

Yet most investors are patiently waiting things out. They’re just not willing to restart their activities until the new government makes clear announcements on trading policies.

There are other governing factors which have led to this outcome, according to the vice chair of the Myanmar Real Estate Services Association (MRESA). He said the seasonal effect from the rainy season and rising real estate taxes have also exacerbated the situation.

Both supply and demand have run low for real estate in Yangon. A lot of property investors are hesitant to part with their assets due to Myanmar’s high tax rate on capital gains compared to the rest of Southeast Asia.

Recent investment policies further worsened the current situation. Until very lately, Myanmar only allowed local investors to own property.

Competitors like Thailand and Cambodia have allowed foreign property owners for a long time and got a head start. As such, the Myanmar property market lags behind its neighbors. A successful economy requires foreign investors.


Change Needed to Revive Yangon Real Estate Market

Experts in the field agree that if the new government doesn’t bring about severe policy changes, the real estate market may stop growing in the future.

However, it doesn’t seem like they will happen anytime soon. The government has no incentive because there are still property investors looking for a quick profit.

Traditionally, real estate has given the highest ROI among other sectors such as industries or garments. Rising land prices are closely connected to local business performance as a whole. This is especially true for SMEs.

As such, new companies will lead to more activity in the property sector. The government can indirectly help the Yangon real estate market by supporting sectors other than property.

However, help for some may already be too late. Some agencies and investors already closed shop because of hard times. More are now dependent on their other businesses to survive.

Nothing is certain what will become of the property sector in Yangon. but one thing is for sure: the market is now in the doldrums. Those making a loss now will step out of the game until the new government provides clarity.

InvestAsian will continue monitoring the Yangon real estate market, as well as Myanmar’s as a whole. We suggest staying out of this frontier market for several reasons though.

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an international stock trader and property investor based in Thailand, Cambodia, and several other places. Reid manages the world's first and only frontier market real estate fund and has been featured in publications such as Forbes, Property Report, the South China Morning Post, and Seeking Alpha. Get his free investment guide by clicking here.

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