Artist’s impression of the Star City project outside centre Yangon
For example, Serge Pun & Associates, a Hong Kong-based property developer, has recently opened a local branch in Yangon in a joint venture with Thanlyin Estate Development and is constructing a 20-block high-end apartment and condominium complex on farmland about 10 kilometers outside of downtown Yangon.
The 160-acre project, called Star City, is being watched with intrigue by local authorities and recently moved-in multinationals in hopes that it will set a benchmark for the real estate market, which has been largely dormant for 15 years.
Other developers with projects in Myanmar are so far mainly from Singapore and South Korea.
Despite the fact that foreigners in Myanmar cannot own homes or land, recently lifted sanctions and subsequent investor attention has already led to local analysts forecasting dramatic rises in prices due to increased demand. According to the Yangon City Development Committee, the population of Yangon city was 6.12 million in 2011, 1.15 million more than the 2010 figure.
Yangon lacks the market depth required to supply incoming foreign companies looking to base employees in the commercial hub of the country. As of 2011, Yangon’s total office space amounted to 60,000 square meters, according to a report by real estate group Colliers International.
Hotel space in Yangon is also experiencing a rise in demand, which increased dramatically over the past two years, Tony Picon, associate director at the Colliers office in Thailand, told The New York Times.
In 2010, an upper-end hotel room in Yangon cost no more than 43,750 Myanmar kyat per night, or around $50, but now it costs three times that, Picon said.
Star City, a project in which Singapore-based Yoma Strategic Holdings has financed 70 per cent of the land costs, is on track with following a similar trend previously experienced in Vietnam, analysts believe. The emergent real estate sector is thus likely to continue to receive support from expansive Asian developers.
Demand for the six existing serviced apartments already in operation in Yangon is predictably high, where monthly rent for a studio goes for about $2,500, nearly double the rate a year ago.
House and apartment prices have also skyrocketed over the past year, with increases for prime property of about 20 per cent. An underlying reason for this was the auctions of government properties starting in March 2011, through which hundreds of properties have been privatised. Sales prices per square foot soared to more than $360 even at secondary locations, the Myanmar Times reported. In comparison, the current average price per square foot on the Los Angeles property market is $281.
These shockingly high prices have stunned both residents and expatriates and left developers mulling over cost-cutting schemes.
Moving development to the city’s peripheries, namely across the Yangon and Bago Rivers, has resounded as a viable option, but faces infrastructural dilemmas due to a lack of bridges and poor road conditions.
