The beginning of 2015 saw a decline in the Yangon real estate market. But the previous week brought about unprecedented weak performance in the property market with. There wasn’t a single sale made in the whole city.
Representatives of several leading Yangon real estate agencies all agree Myanmar’s presidential elections were the main cause of these halted deals. But most also acknowledge other factors they believe are harmful to the market.
Poor performance was universal across the entire property market. The size or type of real estate didn’t matter. A majority of investors have already ceased their activities, but some still want to of sell their properties for some quick liquidity.
The upcoming November 8 elections kept traders at bay. After all, the outcome of the elections could change the market’s very fundamentals.
Most investors are patiently waiting this out. They’re just not willing to restart their activities until the new government makes clear announcements on trading policies.
Yet 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 over the past few months. A lot of property investor are hesitant to part with their assets due to Myanmar’s high tax rate compared to the rest of ASEAN.
Further worsening the situation is the current investment policy. Myanmar only allows local investors to own property. Foreigners cannot own land or real estate of any kind. In fact, they can’t even own condominiums, unlike in regional competitors like Thailand and Cambodia.
Old-fashioned laws only give property ownership rights to locals. This is one reason why the Myanmar property market lags behind its neighbors. A successful economy requires foreign investors as well.
New Condo Law Could Revive Yangon Real Estate Market
However, there’s light at the end of the tunnel. It’s expected that a new law allowing foreigners to own condominium units will be passed next year when the new government is elected.
Experts in the field agree that if the new government does not bring about any real policy changes to the real estate scene, the market may simply stop growing in the future. However, it does not seem like it will be happening anytime soon as there will still be 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 have already closed shop because of hard times. More are now dependent on their other businesses to survive.
A common trend in property markets of every country is that they are cyclical. The silent property market is not here to stay for long. Experts predict it will pick up once again when the elections are done.
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.
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