RANGOON — In a move targeting speculators, the Rangoon government will require idle landholders in the division’s industrial zones to present a detailed business plan for how they will use the real estate or see it seized.
The divisional Industrial Zones Management Committee, under Rangoon’s Department of Human Settlement and Housing Development, announced late last month that the owners of idle industrial plots would be required to submit their business plans by Dec. 15.
“As we’ve discussed, the land owners who are not running businesses on their land will have to submit a detailed business plan. If not, or if the proposal seems like nonsense, those [lands] all will be taken back by the government,” said Myat Thin Aung, chairman of the Hlaing Tharyar Industrial Zone’s management committee, whose members met with their division-level counterparts on the matter.
“[The government] has been trying to take action on these lands. If owners are not intending to run a business, they will have to give back the lands to the government and they will get a land price that is fixed by the government,” he said.
According to Myat Thin Aung, there are more than 2,400 acres of idle land in Rangoon’s industrial zones.
“The government can take back these lands if the landowners are not running a business within the time the government sets for them,” he said.
Though the Hlaing Tharyar Industrial Zone, Rangoon’s biggest, is believed to be operating at full capacity, with some 500 factories setting up shop since the zone was created in the early 1990s, an excess of idle properties bedevils smaller industrial zones.
“The government aims to give these lands to people who earnestly want to do business. Some people are playing the [property] market without running businesses in these industrial zones,” Myat Thin Aung said.
The divisional government would fix land prices at around 12 million kyats (US$12,000) per acre, he said, but rates would vary depending on the location.
Sai Khung Noung, managing director of the well-known Rangoon-based Sai Khung Noung real estate agency, said fixing prices at such a rate would put the properties far below current market valuations, which have been in decline since the government announced last month that it intended to target idle landholders.
“Land owners who have no plan to run a business on these lands are now urgently selling their lands. I’ve received a lot of offers from them in recent weeks,” he said.
“That’s why industrial land prices have fallen by about 25 percent,” Sai Khung Noung said.
Among the industrial zones in Rangoon, the most expensive lands are in Hlaing Tharyar Township, where a one-acre plot can sell for as high as 800 million kyats. In Shwe Pyithar, East Dagon, South Dagon and Dagon Seikkan townships, prices are averaging 300 million to 400 million kyats per acre.
“These land prices are seeing the most significant drop that I’ve ever seen. Though prices have been decreasing, people dare not buy land due to the government’s latest policy,” he said, noting a general decrease in what his clients were asking for after the policy was made public.
“Some land owners told me that they can’t invest in their lands as they do not have viable business plans. That’s why they find it’s better to sell their lands on the market before the deadline on December 15,” he said.
The government has not yet indicated whether it plans to hold onto the seized lands or sell them back to other buyers.
Sai Khung Noung said he expected industrial real estate would continue its decline until early next year, in contrast to a still booming residential property market in the commercial capital.