Poverty has not affected property prices in Myanmar as foreign investors are hedging their bets and investing ahead of a suspected property boom in the country.
Property at a pittance could be expected in one of Asia’s most impoverished nations. This expectation, however, would be naïve.
Widespread political and economical reform has reassured investors that the country is investable and potentially, highly lucrative.
A lack of hotels and office buildings in the dilapidated commercial capital of Yangon means the city is unable to cater for the market of moneyed outsiders. Clearly, there is a gap in the market and investors are looking to fill this void and bridge the gap as prices are presently rising at a hyper-inflatable rate.
Yangon hotels that once charged US$60 a night have now upped their prices to a staggering US$250 plus.
Antony Picon, an associate director of research with the Colliers International, a real estate services firm, confirmed that average rental prices for office space has soared to US$60 per square metre.
He said: “I’ve seen a swamp in the middle of nowhere and they’re asking for the same price they’d ask for in the centre of town.”
Houses that were renting in the hundreds are now renting out at prices in the thousands, according to Picon.
Centrally located homes that recently rented for US$300 per month have now been converted to offices where monthly rent returns of US$6,000, according to Moe Kyaw, managing director of the Yangon-based Myanmar Marketing Research and Development Research Services.
He said: “I mean US$6,000! How can you make US$6,000 worth of money in Myanmar? I really don’t know. There will be a burst in the bubble soon,” reported Daily Tatler.
The city of Yangon has only 60,000 square meters of office space; reported an extensive survey of Yangon’s market undertaken by Colliers International.
In context, the entirety of Yangon’s office space would fit into Bangkok’s largest office building.
Large hotels endured a severe economy by renting out entire floors to foreign organisations that requested Western-caliber facilities, according to Picon. Yangon’s major business hotel, Traders, still operates as a de facto home base for the United Nations in Myanmar.
“It will be a bonanza for anyone who can put up a hotel very quickly,” said Picon. He speculated that average rents per square metre could rise to US$150 before prices lower to a reasonable level. The top present figure in Beijing is US$140 and New York averages at US$120 per square foot, according to statistics published by real estate company, Cushman and Wakefield.
Yangon’s market stagnation stems from Western sanctions – forbidding American and Europeans from trading in Myanmar. These restrictions have now been largely lifted.
By Laura Neve Tacey
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