People often think of Myanmar when anyone mentions “frontier markets”.

 

Over the past decade, the media has exemplified the nation’s political reform and economic growth – and for good reason. It’s now transforming in a way rarely seen anywhere else. Myanmar property could benefit from this transformation the most.

 

Formally known as Burma, Myanmar was one of the world’s most oppressive dictatorships up until the Saffron Revolution in 2007 and just had its first free election in recent history.

 

International observers watched the election and widely consider it fair with no signs of corruption.

 

Because of that fact alone, Myanmar has come a long way over the past 10 years. Transforming from a military junta to a democracy, even if a highly imperfect one, is an impressive feat to accomplish in such a short time.

 

During this period, the country had one of the fastest growth rates on the planet. Myanmar saw annual GDP growth of 12% in 2007. It’s expanded by above 6% on average since then, completely ignoring the Global Financial Crisis which the rest of the world suffered.

 

Skipping recessions is something typical of frontier markets. By their very nature, frontier markets grow quickly, are less correlated with the global economy, and are often not affected by problems abroad.

 

Even putting aside the progress which Myanmar has made, it also has natural advantages which are hard to ignore. Bordering both India and China, it has a geographic location right between almost 3 billion people.

 

As these two superpowers rise, Myanmar is in a perfect position to benefit from the trade, transportation needs, and the rising economic influence of China and India.

 

Coca-Cola and Nike are among the large companies which are tripping over themselves to invest in Myanmar.

 

Investors have taken note of all the factors mentioned above. “How can I invest in Myanmar?” is actually one of the most common questions InvestAsian gets from our readers and clients.

 

While international firms are setting up shop throughout the country, it’s not so easy to invest in Myanmar if you don’t have tons of money like Samsung and Unilever do.

 

In fact, it’s almost impossible to buy stocks or real estate in Myanmar. This is despite the fact that the laws allow for it and most of the institutions are already set up. One of the best examples of this is Myanmar’s stock exchange, which only has one listing and almost no foreign investment.

 

Corruption is rampant, the bureaucracy is thick, and investors have few options for right now. But Myanmar is heading toward the right direction and foreign investment will undoubtedly get easier.

 

We’ll still explore the options which are currently available though, and this guide will be updated as the country opens up more. Myanmar truly is the last frontier in Asia – at least until North Korea opens up. So keeping up-to-date is important if you’re serious about investing in Asia.

 

Can Foreigners Invest in Myanmar Real Estate?

Just as of 2016, Myanmar passed a law which allows foreigners to buy freehold condominium units in their own name. The law was modeled after Thailand’s and lets foreign buyers own up to 40% of the condo’s total project space.

 

However, a building has to be registered under the condominium law in order to qualify. Since the law was just implemented in 2016, that’s hardly enough time to register and develop an entire condo project.

 

This essentially means that foreigners cannot own property in Myanmar as of right now – even though the laws allow for it.

 

Like many things in Myanmar, this will inevitably change. The fact that the law was even passed is a step in the right direction and puts it above several other countries in Asia. Indonesia and Vietnam, for example, don’t allow freehold ownership by foreigners. Period.

 

Several firms have already started building condos since the new law was announced. Of course, it’s only been a year and it shouldn’t be long before foreigners can claim to have successfully bought condos in Myanmar.

 

But even after that happens, you might want to sit on the sidelines and wait for the dust to settle before buying real estate in Myanmar.

 

Even in more developed countries like Thailand, there’s sometimes issues with construction quality. So it’s probably worth seeing which companies materialize as reputable developers before buying property. I don’t recommend being a guinea pig in a frontier market.

 

How Much are Property Taxes in Myanmar?

For foreign non-residents in Myanmar, rental income is taxed at a progressive rate based on your annual income. The tax rates range from 0% to 25%, although the salary of most foreign investors should put them at the very upper end of that range.

 

An additional stamp duty is also payable on rental income after a tenant moves out, and it depends on the rental period. For rental terms of less than 1-year, no tax is payable. The rate is 1.5% of the annual average rent for periods between one and three years, and 3% for periods over three years.

 

In practice, this tax is rarely collected by the authorities. No one ever bothers to ask for it and few Burmese landlords pay it.

 

Lastly, there’s a stamp duty upon selling real estate and transferring it to the buyer. If the property is located in Yangon, the rate is a hefty 7% of its sale value. The tax is 5% if the property is outside of Yangon.

 

None of this really matters yet since foreigners can’t buy real estate in Myanmar. But once they can, these tax rates will probably still be relevant.

 

Places to Invest in Myanmar

Myanmar is one of the most unexplored and underdeveloped countries in Asia. Because of this, along with the fact that the condominium law was just recently passed, there aren’t many cities where foreigners are likely to buy property in the future.

 

Let’s face it: you’re not even able to buy property in Yangon yet, let alone in any of the more rural areas. There aren’t many cities in Myanmar where condo projects will pop up anytime soon.

 

For the purposes of this guide, we’ll only be covering Yangon – the largest city in the country.

 

As a foreigner, you can’t buy property in Myanmar yet. But with condominium projects already under construction, it’s only a matter of time before people are investing in Yangon.

 

For now, we’ll need to talk about the real estate market in Yangon from the perspective of local, Burmese buyers.  We wouldn’t be able to say anything else otherwise. Myanmar is opening up to foreign investment, but until it does, statistics and information as it relates to locals is the best anyone can do.

 

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Shwedagon Pagoda Yangon

Myanmar’s iconic Shwedagon Pagoda is one of the world’s most ornate temples. The nation’s economy should benefit from a continued rise in tourism.

 

Yangon

Formally known as “Rangoon” in English, Yangon is Myanmar’s bustling commercial center and largest city. It also was the capital up until very recently. Naypyidaw became the capital back in 2006.

 

Yangon is also the only place in Myanmar which should see foreign property ownership over the next few years. The condominium law just came into effect in 2016. But it only makes sense that the first properties eligible for foreign ownership will be in the nation’s most populous city.

 

Currently, prices in Yangon are absurdly high and almost certainly in bubble territory. Rental rates are around $80 per square meter in the downtown area. This is even more expensive than average rental prices in Singapore!

 

By the time foreigners are able to buy and own freehold property in Myanmar, will prices have come down? Who knows?

 

But just like Myanmar’s economy and laws are in a constant state of change, so is this guide. Let’s look at some of the townships in Yangon where local property investors are buying.

 

Dagon Township

Dagon is a township located just to the northwest of Kyauktada – the city’s political center and most popular area for tourists. It’s quickly becoming popular for expats and wealthy locals due to its close proximity and easy access to downtown.

 

Buildings and infrastructure closer to Yangon’s center are typically old and from the colonial area. But there’s a bit more space for new construction out in Dagon. This means better roads and more desirable living conditions here than in other areas of the capital.

 

Those things, along with having some of Myanmar’s top schools, several embassies and five-star hotels makes Dagon one of the city’s most desirable areas to live. If prices rise in Yangon, this area should be among the townships to benefit most.

Myanmar Property

Western-style homes like these can be found in Bahan.

Bahan Township

A bit further north from downtown than Dagon, the township of Bahan is more popular with wealthy locals than for expats. Regardless, Bahan is a prosperous suburb which shares many of its same traits.

 

While not quite as central, parts of Bahan lack the hustle and noise found in areas closer to downtown. It’s possible to own (or in the case of foreigners right now, rent) big homes suitable for families. There’s also more greenery and a large lake out here.

 

Since Bahan is one of the few areas near Yangon’s city center where you’re able to live a relatively secluded, western lifestyle, it should become even more popular with expats in the future.

 

Botataung Township

The township of Botataung is more central than either of the last two – even if just slightly. It’s part of downtown Yangon, barely 500 meters away from City Hall and the famous Sule Pagoda.

 

Because of its central location, Botataung will go through more construction and development than most other townships in Yangon. A commercial center is starting to form and in the future, many foreign businesses expanding into Myanmar should set up shop in this area.

 

As of right now, Botataung is quiet compared to most other areas. This is caused by a combination of Yangon’s ban on motorcycles, along with the fact that your typical local doesn’t have much of a reason to be here.

 

Other Neighborhoods in Yangon

Yangon is a sizable city of over 7 million people and growing fast. There’s far more than the three townships discussed previously – in fact, there’s 33 of them.

 

The problem is that many of these areas, especially the outer suburbs, lack basic services such as electricity and clean water. They won’t be seeing condominiums and apartments anytime soon. So there’s no need for discussion about them.

 

Is Myanmar Property a Good Investment?

Absolutely not. Even if foreigners were able to buy real estate in Myanmar (which they should be in a few years), the bureaucracy is too strong and the prices too high. I couldn’t recommend anyone to invest in Myanmar property.

 

It’s possible that prices will drop to an appropriate level in the next few years. This guide will be updated once options for foreign ownership increase as Myanmar’s economy develops.

 

Until then, buyers should consider investing in places like Cambodia if they’re interested in frontier market real estate.

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He’s an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. He’s been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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