Despite easing foreign ownership rules on Myanmar property, the country’s housing market is still facing a slump.
The uncertainty over a law that permits foreigners to purchase condo units in Myanmar is extending a slowdown in the country’s housing market, reported Bloomberg.
According to local developer Yoma Strategic Holdings, the rule introduced in January 2016 is impacting efforts to attract investors due to several ambiguities, like whether it pertains to existing apartments or not. The sector’s prospects now partly depend on the by-laws that the authorities are legislating to clarify the rule.
While the law allows overseas buyers to own 40 percent of a residential project, there are several missing details, such as the requirements for a development to qualify as a condominium.
“It’ll (by-laws) be a big change for the sector. There was a very bullish market from 2011 as the economy opened up and investment came in, but residential property has quietened down quite a lot in the past 18 months,” said Yoma Executive Director, Cyrus Pun.
Based on data from Colliers International, prices of upscale condos declined 22 percent last year compared to 2014, while that for mid-tier units slumped around 41 percent.
Meanwhile, Myanmar’s Department of Urban and Housing Development revealed that the by-laws have been drafted. Although the exact timeline for its implementation is not yet known, government officials are working as quickly as they can to complete it.
“We expect the by-laws early this year,” shared Pun, adding that a clearer condominium rule would help attract property buyers from Singapore, Thailand, Hong Kong and China, which is expected to be the largest source of demand.
“Some Chinese buyers are already coming in to buy, but through alternative channels,” he noted. “They may have structured deals where they are making an investment rather than buying an actual title. The condominium law would open the market to retail buyers.”
However, Colliers International analyst, Joshua De Las Alas, thinks that the by-laws will have marginal effect on sales in the short to medium term due to prevailing market conditions.
“Current condominium selling prices in Yangon are still very much higher than anywhere else in Southeast Asia – making it a risky investment in the short run,” he said.