June 16, 2017

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Real estate market remains cool, expert says

By May Thet Hnin

U Khin Maung Than, chair of the Myanmar Real Estate Services Association

Interview on 9 June with U Khin Maung Than, chair of the Myanmar Real Estate Services Association by May Thet Hnin, a reporter for the Global New Light of Myanmar.

Q:  What is the current condition of real estate market?
A: First of all, let me give you a brief history of the real estate market in recent years. The Yangon market is the main player in the Myanmar real estate market. We witnessed high prices for real property between 1989 and 1997. It is said that those eight years were the golden age of the real estate market in Yangon. The establishment of new townships, East, South and North Dagon Myothit, Dagon Seikkan, Shwepyitha, Hlaingthaya, Shwepaukkan, etc, drove the real estate market to develop. The market fell between 1997 and 1998, and then it returned to normal thereafter. The unfavourable declined real property market was seen in 2004-2005. When the market hit the highest point, the buyers could not reach it. Therefore, the price slowly started to decrease, resulting in a cool market. Again, the price was seen to be on the rise in July 2007. A levy of a 15 per cent tax, comprised of 8 per cent of income tax and 7 per cent of stamp duty, shook down the real estate sales market. The market was dramatically strong due to the decrease of income tax. And the year between 2012 and 2014 could be marked as second golden age of the real estate market. The previous government hiked the tax rate up to 35 per cent in maximum, making buyers mull it over before purchase, which cooled the market in late 2014. To make a tax revision, the associate members of the Union of Myanmar Federation of Chambers of Commerce and Industry and officials were allowed to submit a report. The previous government reduced the income tax in 2015. However, the previous government increased the rate of income tax before the 2015 General Election. The rate remained unchanged during the incumbent government and the market has been cool since 2015. Only those who need to buy houses made a deal. The real property market across the nation has been cool.

Q: May I know the prevailing market price of the houses in different places and how much does the price drop?
A: Previously, a 20 to 40 feet wide plot of land on the main road of Dagon Myothit Township sold quite well. The real property with an estimated worth of Ks550million plunged down to Ks170million in Dagon Seikkan Township. Despite the drop, the market was still cool. The price of the houses in small lanes of those townships dropped from Ks50million to Ks15million. The price of the houses on Kaba Aye Pagoda Road decreased by Ks200,000 per square foot. The houses on the main road slumped by 20 per cent. Selling of apartments and condominiums is harder. Starting from 2015, a mortgage market has become strong.

Q: How about the condition of the rental market? How is the rental market for foreigners?
A: The rental market fell by about 25 per cent in late June 2015. The apartments which rent for Ks100,000-200,000 are seen well.
There are high numbers of foreign investors entering Myanmar but there is no profound increase of the rental market for them.

Q: How does the cool real property market affect the businessmen engaged in this industry?
A: Previously, people had a keen interest in the real estate deal. Agents were forced to change jobs as some companies were shut down. They were not able to survive from nearly three-year cool market. At present, there is a wide range of markets to put investments — stock market, gold market, banking business.

Q: What you would like to request of the officials concerning the cool market, which was battered by the tax rate?
A: Myanmar Real Estate Services Association, as associate member of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), will submit a report at a meeting of Vice President (1) U Myint Swe and UMFCCI. We will submit a report to set the price of the house per square feet across the country every year, reduce the income tax, pass by-laws of condominium law and formulate real estate service law submitted by Myanmar Real Estate Services Association on 8thSeptember 2016 as soon as possible. If the tax rate is reduced, it can encourage the dealers to make legal transactions and increase tax payers. I wish the state to help support for real property market to raise its head.

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