The old ‘Boom Town’ labels no longer apply when discussing the Yangon real estate market. Nowadays we are seeing some sectors slow down as other new opportunities present themselves. Verity Ramsden of Yangon real estate agency Slade Property Services guides you through the newest trends emerging in Myanmar’s biggest city:
Office and residential real estate experiencing a slowdown…
The past six to nine months have seen a continual drop in office rents and a lowering of take-up rates of new residential condominium projects. Both of these trends have been caused by supply suddenly outweighing demand, and by market wariness thanks to the elections, months of Kyat depreciation and, more indirectly, the extremely low oil price.
…However we are experiencing a lull in these downwards trends
Since the end of January, market sentiment has been buoyed by a number of factors: a slight oil price recovery, a peaceful election and subsequent transition, a sudden leap in the value of the Kyat against the US Dollar, and the tantalising prospect of foreign real estate ownership (see below). All these have led office rents to plateau out, rather than continuing their downward trajectory. Likewise, there has been a marked increase in the number of residential sales in the last few months. The Yangon real estate market could never expect to maintain the bubble-like conditions of 2013 and 2014, and a readjustment was both likely and necessary, but recent weeks have slowed this process to a more reassuring pace.
Foreign ownership on the way
The last week of January saw the outgoing parliament approve a new Condominium Law. It is yet to be signed by the President, and it is not yet clear exactly which projects will fall under the law’s definition of a condominium. However, it does seem that those projects which do benefit from ‘Condominium’ status, will be allowed to sell up to 40% of units to foreigners, which could potentially rejuvenate the residential market. Indeed, SPS and other Yangon real estate agency/consultancy companies have already noticed a sudden spike in uptake and interest from Myanmar citizens hoping to benefit from the future implications of this law, particularly since it was announced that the law may be applied to existing projects and to properties built on government-owned land.
Growing interest in outlying areas
As Yangon’s population is set to rise to as many as 10 million people in the next few years, seven ‘New Cities’ have been announced on the periphery of the urban area, set to contain new industrial zones, offices, shops, schools and affordable housing projects. The first of these new zones, to the east of Yangon, is already being built, and bridges across the river to the south and south west new cities are due to begin construction soon. These plans have already seen land prices in affected areas jump up, as speculators look to cash in on future development, but it remains to be seen how long these new cities will take to develop, and what effect they will have on congestion and prices in existing urban areas. Nevertheless, it may add a new stock of secondary and tertiary assets to the available investment stock.
The Yangon real estate market has changed considerably in the last few years, but remains full of great opportunity. With market research, advice and representation from a Yangon real estate agency professional such as Slade Property Services, a shrewd investor could be in a great position to make the most of these changes.
ABOUT THE AUTHOR:
Verity Ramsden is a Chartered Surveyor with over 5 years of real estate industry experience in the UK and Myanmar. She joined SPS in February 2015 and heads up the Valuation and Advisory Department, providing clients with real estate consultancy on assets in Yangon, Mandalay, NayPyi Taw and beyond.