Since earlier this year, Rangoon’s formerly dynamic real estate market has seen a striking cool-down in key locations in the city. While many factors have contributed to this economic malaise, Burma’s Nov. 8 general election, which is hoped to be the country’s freest and fairest in decades, has surely played a part. Because of the uncertainty surrounding the current political climate, many investors, both local and international, are approaching Burma’s real estate market with a wait-and-see attitude.
Than Oo, managing director of the Mandine Real Estate Agency and vice chairman of the Myanmar Real Estate Services Association, spoke with The Irrawaddy this week about the future of Burma’s real estate market.
Many people have said that Rangoon’s real estate market has cooled down because of the country’s historic election, scheduled for Nov. 8. Is this true?
Yes, this is true in some places [in Rangoon]. Overall, the market has cooled down. For instance, the market for luxury houses as well as land in project areas is rather sluggish. But there are still small-amount dealings—dealings worth less than 100 million kyats—in other places. And as we are now in the Thadingyut period [the seventh month of Burma’s calendar, and when many people are moving after the three-month rainy reason], rental agreements are also being renewed.
Do you mean that Rangoon’s lucrative real estate market has crashed?
There are still high-value dealings, but now they are few and far between, unlike between 2011 and 2013. A number of factors have contributed to the decline, as we are currently seeing. But now the decline is also largely because of the election. Everyone is approaching it with a wait-and-see attitude.
Do you think that the real estate market will bounce back after the election, and if so, why?
We’re waiting for that to happen. The real estate market depends on Burma’s economy, and Burma’s economy depends on politics. The country’s politics need to pave the way for economic development. Both local and international communities are waiting to see what happens. A comparison of foreign investments between May and now makes the issue plain. In May, foreign investments totaled just over US$56 billion, but there has been little change in this figure since then. Western countries in particular are coming at the situation with a wait-and-see attitude. And if these big economies are taking this approach, then other countries will surely follow suit. They’ll keep an eye not only on the real estate sector but also on other economic sectors. In fact, all of Burma’s economic sectors, not just the real estate market, are sluggish and are cooling down.
What places in Rangoon that were once lively are now seeing a cool-down in the real estate market?
This cool-down is happening in many townships, but it’s particularly been in Bahan, Mayangon, Kamayut, and Sanchaung townships where the market for high-price property has declined. There was formerly a vibrant property market—including the market for condominiums— in South Okkalapa, North Dagon, and in industrial zone areas such as Dagon Seikkan, Dagon South, and Dagon East. But now the market has started to stagger in these places, too. There are two sectors of the property market—sales and rental. Though the sales market is slowing down, the rental market is doing well, but it’s still not as extraordinarily lively as it was between 2007 and 2014.
Do you think that we’ll see positive changes in the real estate market if the new government is able to adopt clear policies regarding the property market?
Because Burma’s property market is linked to its economy, the new government must adopt good economic policies in tandem with good political policies. At the same time, the economic and foreign policies of Burma’s neighbors will affect the markets here. Some have withdrawn investments, while for others investment has been low. There are also various other factors [that have affected the property market] aside from the election, such as the heavy flooding in June and July that caused serious damage in 12 divisions and states. Added to this are the problems of corruption and bribery that have benefitted cronies and rich people who have laundered money by investing in the property market.
Everyone says that the property market is the best place to launder money. Will this change under the new government?
This is why we have to wait and see how the election goes. I don’t want to talk about hopes before we have seen any results. But seeing as how the main opposition leader [Aung San Suu Kyi of the National League for Democracy] has recently said that she would not hold any grudges but rather cooperate [with those currently in power, if the NLD wins a majority in the election], I don’t think that she will retaliate against those who did very bad things in the past.
What will happen if the Condominium Law is enacted next year?
There may be changes if the Condominium Law is enacted. The law was drafted in 2013. It is taking a long time for it to be enacted because [the government] does not want to allow foreigners to own land [in Burma]. But I don’t know if the leaders of our country know or not that foreigners already illegally own land in Burma.