The pandemic has raised a query to a number of countries around the globe as to whether they should continue or halt their respective national elections amid controversies in either case. As at the end of H1 2020, more than 100 countries, states and territories — challenged with the view of possibly spreading the virus by holding their elections under current conditions — have already opted for deferring the vote. Hitherto, some of them have taken the challenging road of still proceeding with their scheduled elections. And amongst these nations is Myanmar.
For the second time since the culmination of the martial administration a decade ago, Myanmar is set to hold its general elections this coming November 8, which involves nearly 100 political parties and contests for the upper and lower houses of the national, state and regional governments. In retrospect, the 2010 elections attended as a tool for military leaders to direct the country towards a more democratic form of state. The 2015 elections were principally a political referendum in counter to military rule, eventually leading to a rule of the National League for Democracy (NLD) under State Counsellor Daw Aung San Suu Kyi. To date, this year’s election is viewed to be the most crucial and is expected to be more competitive than in the past. Though the assumption is that the impending election will be vital to the growth trajectory of multiple facets of the economy, it has posed several critical questions: What does this mean for the property industry specifically? Should investors delay commercial real estate acquisitions amid the uncertainty of a hotly contested election? With the pandemic similarly at play, what will be the market dynamics going forward?
Similar to determining the period of total virus containment in the country, the outcome of the election is uncertain. While there will surely be an impact, SPS sees that the election results will not have an immediate bearing to the industry. As long as the crisis remains uncontrolled, the adverse impact of the situation will remain the most pressing constraint. Electoral affairs can have an impact on investment markets, but given the crisis, those changes will only transpire in the succeeding years and will be highly dependent on the recovery of macroeconomic fundamentals. Investment volume and total return data patterns suggest that the crisis will remain the key reason as to why investors will continue to delay property transactions at least until end-2020.
The presidential election is not the only election that could impact transactions moving ahead. The local and state governments will, in the same way, shape the market at large. SPS believes that local elections have a more direct impact on commercial real estate, since they often involve issues like property taxes, rent regulations and other related dynamics.
Based on our assessment, rather than singling out electoral results, investors should similarly monitor other central indicators such as COVID-19 developments, economy, geopolitical events, and long-term growth drivers such as demographics and technological changes in determining investment fundamentals and property values. Looking ahead, different administrations have different spending priorities that will impact where growth occurs across the nation and what industries have greater growth opportunity. And while we acknowledge that there will likely be a lag between the election result and the impact on property, it will be important for existing and prospective investors to conduct proper due diligence to identify potential opportunities and/or risks.