Is Myanmar On The Brink Of A Boom (Again) ?

John Barnes, Director of Marga Group, the leading developer in Myanmar, seems to think so. In an interview with Asian Property Review, the Hong Kong-based developer is fully convinced that Myanmar will see a new prosperity in the horizon.

APR: Is now the right time for foreign investors to enter the property market in Myanmar? Or, will it take another 5 – 10 years for the market to mature sufficiently for foreign investors to take a serious view? 

JB: The transition of power has proven to be extremely successful, but there is always an adjustment period for a new government. We see that most investors have taken a wait-and-see, cautiously optimistic approach over the last year, but we see a new wave of foreign investments coming in which will help unlock liquidity quickly. With the lifting of sanctions, an integrated ASEAN coupled with Belt and Road Initiatives bodes very well for the short- and long-term prospects of the property market. The Myanmar market can mature quicker with sufficient promotion. For example, leaders of Pakistan, the Philippines and Indonesia recently came to Hong Kong to speak with investors to generate excitement for Belt and Road countries, and these efforts were immensely successful. Myanmar is starting to do the same. In conclusion, there is no better time than now to enter the property market in Myanmar as the entry valuations are still at attractive levels.

APR: There is a consensus that land and property prices are extremely high in relation to its neighbours and the purchasing power of most of its citizens. Most analysts have mentioned that eventually prices will come down to more sustainable levels. What are the factors that will bring down property prices in Myanmar?  

JB: We have to discuss land and property markets separately.

Yes, land prices are extremely high, especially freehold, but those are only asking prices – a reflection of buyers’ bias created by a few inflated transactions over the last 4 years coupled with the landowners’ incredible holding power. There are almost no transactions at those prices, so we should not call that the market price. Government leasehold premiums are more reflective of market prices, though the land rent component is still regarded as expensive compared to other countries in the region. We expect land prices to adjust in the medium term.

As for property prices, you have to look at yields. In some segments, the yields have been trending down, partly because of lacklustre performance caused by political uncertainty. Yields for luxury residential and retail segments, however, maintain at higher levels than regional competitors, therefore we think there is still a lot more room to grow. With these two sectors, foreign ownership and mortgage credit will unlock larger economic participation from different income classes as well. We maintain optimistic about property prices as the economy further expands and opens up.

APR: Back in October 2016, a draft law to regulate real estate and property related services in Myanmar was going to be legislated, according to the Myanmar Real Estate Services Association. How is the progress so far? How long more is the estimated waiting time for the new government to put in place a proper legal and financial framework to govern land and property matters?

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