Developers bank on advance payments
Myanmar property developers are now doing business mainly through down payments due to lack of proper financing mechanism, pushing risks to home buyers, said a retired official at a seminar on challenges and opportunities in housing and construction.
The developers put the units on the presales market in which buyers have to place a down payment for a unit before constructing or developing a property, say experts at a seminar for challenges and opportunities in housing and construction.
"In Myanmar, presales system means "A fish is fried with its own fat" – buyers have to pay advance for purchasing units to contractor to build. In some cases, buyers want to make more down payments but are not allowed. For some with cash, that wouldn’t be a good deal. So, there are some challenges in presales system," Myint Mo, a retired deputy director for the Department of Human Settlement and Housing, said.
"The government has to focus on the development of low-cost housing. And it (the government) needs to invest in those projects. Meanwhile, commercial housing should be developed as well. Construction business for commercial buildings seems quite strong at the moment. Currently, the Yangon City Development Committee has allowed at least twenty 20-storey plus building projects and three 30-storey plus tower projects. But there are very few low-cost housing projects. So there are more squatters. It would be better if more low cost housing and affordable housing are implemented. Now, buildings are being built for money because financial mechanism is weak," Myint Mo, added.
Writer Than Soe (Economy) said 80 per cent of construction businesses are running with bank loans and the term for the loans is just four years. Speculation is high in the real estate market. The property price in Myanmar is skyrocketing and massive development sparks huge import volume of construction materials.
"The housing sector is important in the way to develop the country’s economy. It also affects political consequences. For example, if a job is being created in housing sector, there will be two more opportunities in other sectors according to the World Bank. What Myanmar needs is a comprehensive housing policy. We are solving the problems with short-term solutions," Than Myint Oo, the CEO of Soil Energy, said.
Aside from challenges in horizontal and vertical expansion of cities, the experts also discussed construction quality.
"Experienced technicians are needed for high-rise construction. Quality should be maintained. Therefore, both contractor and inspector are vital in making the buildings meet with standard quality," Than Myint Oo added.
