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What makes Myanmar property so expensive?
Property is one of the most interesting areas for potential Myanmar residents. During a recent fact-finding missions, one of our clients surprised us by telling us how much Yangon has to pay for it. Myanmar really has no market, so there are very few possibilities for investments.
In order to try to generate yields on their assets, many individuals have put it into properties and homes.
Because the country was purchased with money, there is no stress from the bank to sale the country, and we have seen noteworthy patience from the vendors in the property in. Just refusing to lose their lands and waiting patently for the markets to recover. While many believe that these elements have caused a property boom in Myanmar, the fact is that the price is just not dropping.
A further facet of Myanmar's property that should be understood by overseas investment is the presence of brokers in the state. Due to the shortage of large companies that hire labour, there are relatively few company positions in Myanmar, which means that a significant proportion of the population has become'realty brokers' (part-time or full-time) who connect shoppers with vendors to make commission.
It is in the immediate interest of these agencies to keep sales rates relatively high, as their commission is calculated as a percent (usually about 2%) of the sales value. Another of the reasons properties are pricey is the value they perceive within Myanmar's population. Considering property to be secure, something they can hand down to coming generation.
There is also an understanding that property is in short supply, especially in Yangon city centre. The Yangon is currently THE harbour in Myanmar, and the value of its properties reflect this state. Property is appealing to those who see the wealth of old Yangon colorful old settlement and imagine building a shopkeeper' s establishment or an appeal.
In fact, the town' s architectural style is unparalleled and there is room for more of Myanmar's touristic sites. The majority of these properties were sold at auction by the Myanmar authorities and acquired by prosperous companies in Myanmar. They are considering converting the property into a hotel or museum, but many are looking for overseas companies to administer the attraction - they are not looking for investing because they already own the property.
Fortunate Myanmar business people have a good understanding of the building's capabilities - don't wait for any bars. Yangon town centre, but looking for farmland or plots outside the major urban centres, will find much cheaper rates. Indeed, we have seen some very inexpensive farmland that has the capacity to be very lucrative, considering how fruitful the Myanmar soils are.
In Myanmar, aliens cannot own lands, condominiums, apartments or any kind of owner. Non-nationals can, however, rent lands for up to 60 years with an MIC licence. Many of these types of real estate - especially in Yangon are located abroad. If we say that a real estate is in overseas ownership, this of course means that these four hotel have been given the right to use the country under a Build, Operate, Transfer (BOT) contract.
There are many vendors hoping that the new Foreign Investment Act will contain rules allowing foreign nationals to buy condominiums (similar to the Condominium Act in Thailand), but that will remain to be seen. Read the Myanmar Investment Guide to find out more about Myanmar's ownership rights.