Cautious real-estate interest in Burma

It says that with a gradual opening and new pro-development economic policies due to come into force, the company’s real-estate sector could be on a dramatic new course for growth.
The comments were in the first Yangon [Rangoon] property-market report from Colliers’ Thailand office.
"You could say that the situation for investors is a bit like amber at a traffic light, with everybody ready to go after the sanctions are lifted and new investment laws are passed", said Colliers International Thailand’s managing director Patima Jeerapaet.
He said land prices in prime locations such as Pyay Road and downtown Rangoon were achieving the same levels as those in the centre of Bangkok, in anticipation of an “opening up” in the near future. However he sounded a note of caution.
"We have been down this route before in this country, only to have the door closed, so there is some caution within the optimism", he said.
But with Burma slipping to the bottom of the Asean economic league – below both Laos and Cambodia – Patima believes there will be added impetus for reform.
"Myanmar was one of the richest countries in Asia in the fifties and there is a strong appetite within the country to realise its potential once again," he said.
According Colliers’ associate director of research Tony Picon, the history of Burma over the past 20 years has significantly altered the way investors should think about real estate in Rangoon, the country’s commercial centre.
"One example is that the most sought after and expensive units of an apartment block or condominium are on the ground floor, which is totally opposite to other countries – and for good reasons," he said.
In fact, the Burmese definition of what differentiates an apartment from a condominium is also unusual. "In Myanmar, a condominium has a lift whereas an apartment doesn't, because there is no law defining actual strata title," Picon said.
The Rangoon office market is beginning to reach saturation point, with total supply limited to around 50,000 square metres, less than many individual office buildings in Bangkok. According to Colliers’ senior manager of research Surachet Kongcheep, occupancy is 100 per cent in all but one of the buildings.
"There was no new supply for the whole of the last decade, but one new office building opened in 2010," Surachet said. "Many businesses and NGOs occupy space in residential units and some have taken up space in hotels and serviced apartments."
Both the hotel and serviced-apartment markets are now seeing very robust demand, mostly on the back of a surge in growth from tourists following the release of Aung San Suu Kyi and renewed interest from businesspeople.
Picon said hotels were turning people away because of increased demand and so little supply.
Next year will be critical for Burma as an investment law is expected to be passed that could lead to a pro-development growth model based on export-led manufacturing, he said.
"That is the only way that sustainable growth can occur – as has happened in Vietnam, Cambodia and Laos in the past 10 years or so."
Picon said gestures of reconciliation between the government and the opposition could become more tangible and eventually lead to an ending of sanctions. New finance regulations are planned that will bring the official rate of Burma’s currency – the kyat – in line with the market rate and allow smoother operations in what is essentially a cash-based economy.
Picon sees the currency, investment law and sanctions as the three pillars keeping the traffic light on amber.
"Once these three are dealt with, the green light will appear, and although – like any emerging economy – the road will be difficult and with many obstacles, the country will soar and we hope the Yangon Property Report for 2021 will very different from that in 2011,” he said.