Property in Yangon draws 'black money'

Myanmar’s property market has been rising in value dramatically, and analysts attribute this to two main factors. 

One is the growing demand for housing in urban areas, and the other is the government’s expansion and building of low-cost housing projects. 

This generally ignores another major influence: the influx of black money into the property market, inflating prices and speculation. 

Investopedia defines black money as the “proceeds, usually received in cash, from underground economic activity”.

“The main problem of our country is we cannot control black money, which flows into the housing market,” said a businessman from Hlaing Tharyar Industrial zone, who declined to be named. “Another problem is that some local businessmen who applied for industrial land and are doing nothing. Those cases should be handled effectively.”

Before 2007, buying land came with a hefty 50 per cent tax. Later that year the taxation system was changed. Now there is a 15 per cent levy and it is no longer compulsory to show the origins of one’s income. 

While this has made buying and selling land much easier, it effectively opened the window for money laundering and illegally gained capital to be invested in the real-estate market.

Due to this, property prices have been steadily rising since 2007 as the proceeds from drug trafficking, timber smuggling, illegal mining and gem trading all find their way into real estate.  Once a sleepy city, construction sites have become ubiquitous in most of Yangon. 

Although foreigners are not allowed to buy property under the country’s laws and regulations, land has been purchased using the titles of Myanmar citizens. The authorities can take action if either Myanmar citizens or foreigners are found to be deceiving the law, but such laws are rarely enforced. 

However, much of the speculation is also due to urban expansion in Yangon and surrounding industrial zones, pushing up real-estate prices in areas that were formerly farm land. 

Most of the speculation is due to local government plans to expand Yangon city, which will include developing a number of areas between Thanlyin and Kayan townships, as well as building affordable housing in North Okkalapa, Shwe Paukan, North Dagon and Kyimyindine. 

Often the speculation has led to the buying up of land by wealthy businessmen who then sit on it waiting for the opportune moment to either sell it again or develop it. 

Such speculation may not be healthy in the long run and is already scaring off investors interested in doing business in Myanmar.