RANGOON — The property market in Burma’s commercial capital has seen little in the way of recent sales or investment as developers await the results of the country’s general election later this year, real estate agents told The Irrawaddy.
Skyrocketing property prices in Rangoon peaked in 2013 with speculation rife and increasing demand for rental and commercial space far outstripping supply.
Previous government initiatives rejigging property and land taxes failed to arrest the upward trend which saw average prices for properties on Rangoon’s main roads reach highs of between 700,000 and one million kyat per square foot in 2013.
However, in 2015, market demand has fallen—although prices remain high—with little new investment.
“There is no one playing the real estate market and purchasing power is decreasing this year,” said Moe Moe Aung, general secretary of the Myanmar Real Estate Association.
Demand for high-end property in prime locations in Burma’s biggest city, such as Bahan, Kamayut, Mayangone and Sanchaung townships, has seen a significant decline and landowners are adopting a wait-and-see approach as a crucial nationwide election nears in November, Moe Moe Aung said.
“[Demand] for properties priced above one or two billion kyat is significantly down this year,” she said. “Although the government reduced some sales taxes, demand is still going down.”
In April, the government lowered the property sales tax to: three percent on deals up to 100 million kyat; five percent on deals from 100 to 500 million kyat; 10 percent on deals from 500 to 1 billion kyat; 20 percent on deals from 1 billion to 1.5 billion kyat; and 30 percent on deals above 1.5 billion kyat.
All taxes are payable to the buyer, according to the vice chairman of the Myanmar Real Estate Services Association, Than Oo, who quoted the above figures to The Irrawaddy.
Sales are also subject to a stamp duty, set at 5 percent of price value in Rangoon, while sellers are subject to a flat 10 percent tax rate, he said.
Zaw Zaw, senior manager of Unity Real Estate, noted that land prices had not fallen despite dropping demand and that investors were more interested in the gold market.
“In the past, investors came into the real estate market when they heard rumors of political change in the country. But this time, they’re just eyeing gold and the US dollar rather than the real estate market,” he said.
“As prices are still high, people are only interested in investing in small scale land in areas like North Dagon and South Dagon. Demand for high-end properties is quite cool,” he added.
Sai Khun Naung, managing director of Sai Khun Naung real estate agency, told The Irrawaddy earlier this year that if the government wanted to reduce land prices, they would have to expand Rangoon as more people flock to the commercial hub to do business.
“People rely on [Rangoon] for their businesses, which is why people prefer to stay here. But there is a lack of new housing projects in [Rangoon]. This is a major reason why property prices are still going up,” he said.
Despite the current stagnant state of affairs, Moe Moe predicted the market would see an upturn following the November election.
“I’m optimistic about that,” she said.
