Written by Mohamed P.Hassan
The country, which has been hit by several massacres and civil wars and unrest, has now corrected the course of its economy. Real estate being the biggest beneficiary now is a fertile ground for investment. Although no laws have been officially put to help foreigners buy in property, some interested have managed to tap into the market.
Myanmar (commonly called Burma) is an emerging economy, with a real since it is almost starting from Zero. The country economy have started to stabilize as of two years ago, when a civilian government took over power from the military. The country’s GDP is currently estimated at USD 51 billion and its growth rate for 2013 was last estimated by World Bank in past October at 6.8%.
Since the early days in 100 BC, Myanmar have been the main trade route between India and China. After the British invasion, it have turned out to be the wealthiest in the region. It was then world’s largest exporter of rice and one-step ahead of its ASEAN (then Southeast Asia) peers. However, later the country’s rulers civilians in 1940s and 1950s and military coups in 1960s and later have led to it being refered to as the “least developed country” in 1987.
In 2011, when a government change led to a major policy of reforms that included anti-corruption regulations, the country started to breath in hope. The currency exchange rate developed, where before this date the currency, Burmese Kyat or MMK, was vague and had no strong international presence.
The country strategic location and wealth have allowed it to overcome all of the possible bad reputation and attract investments with a jump from USD 300 million in 2009-2010 fiscal year to USD 20 billion in 2010-2011. Now the economy is expected to make even a greater leap with a new deep seaport in Dawei (South of Myanmar) is expected to complete at the expense of USD 58 billion, connecting ASEAN with MENA region.
Real estate is one of the greatest impacted sectors of the Burmese economy. A clear measure is the rent rate, which is now evaluated at USD 78/month per square metre in some premium locations. Foreign investors who still cannot own their own property and are limited to rent have pressured the sector.
The hike in rent prices could logically be also a result of the fewer options available. However, as a “Bloomberg” article stated last year it is very much related to local millionaires who have been spending in huge sums in real estate. The trend of these investors shy from overseas real estate even in their ASEAN neighbours, have pushed property prices to a point where foreign investors could find it hard to come in even for other business sectors.
In 2008, United States banned imports of Myanmar, which lead to a huge Chinese demand from the local Gem market. It worth to note at one time gem traders were earning an average of USD 75 million a day. The gem industry economic “boom” fuelled the property prices and might have been the first reason for the “crazy” prices we are seeing today.
Presidential policies have pushed towards floating the currency in last year’s April. Some believe this “free-market economy” is not going to allow an ease of the property prices, which might only go down when new developments are put on the market. However, the higher land prices might prove challenging for new developments. According to Serge Pun, chairman of Yoma Strategic Holdings Ltd., these have increased from MMK 3.5 million in 1995 to MMK 450 million per acre.
Officially, Myanmar economy grew 6.5% in 2012-2013 fiscal year, however according to “The Economist”, which also cites fact the number might grow even bigger this year, these numbers are bogus. It is impossible to use the poor statistical network in the country to accurately asset Myanmar economy, explained David Dapice, an economist at Harvard University.
USD 1 = MMK 982