HOUSE OF THE WEEK

An abundance of space at FMI City

CERTAINLY, space is not a problem in this house – once you get there. Over the Hlaing River, 45 minutes from downtown, there is a large one-storey house in a big compound waiting for someone ready to trade time for space. ...more

Yangon Weather Forecast, Burma

A year to forget, say developers

THE year 2009 may have been one of the worst ever for Yangon’s property developers, industry sources say.

U Lazarus, managing director of Yadanar Shwe Htun Construction, said 2009 had been an unsuccessful year for developers.

“Although YCDC is trying to get developers to raise living standards, in reality most developers won’t comply because of practical difficulties, which will reduce the amount of new building as a consequence. Construction is down by half compared with last year, which also reflects the fall in demand,” he added.

U Ko Ko Htwe, chairman of Taw Win Family Construction, said 2009 was the most difficult year for developers.

“The fall in demand is much worse than last year. Location is a crucial factor, but it isn’t easy to find a good business location that’s already vacant,” he said.

Price-cutting is one strategy developers can pursue.

“At the moment, properties worth K60 million or more sell poorly,” he said, adding that developers are slashing their profits just to keep their competitive position in the industry.

“There are no positive signs regarding demand in the industry so far this year. Low spending power has depressed demand to barely half of what we saw in 2008,” he said.

He added that the property tax extension decided last July, which left sales worth less than K5 billion capped at 15 percent and those K5 billion and above at 12pc, was one piece of good news for the industry for the year.

But the new requirements for increased drainage and additional deposit have led to a significant dip in the number of applications for new construction compared to last fiscal year. The number of building permits issued in the first six months of the 2009-10 fiscal year was only 143, compared to 588 for the full year of 2008-09, YCDC statistics reveal.

“The drop in demand this year compared to last is about 30pc,” he said.

U Wanna Phyo Zin, general manager of Shan Nagar real estate agency, said the whole industry is sluggish this year except for essential buys.

“People can’t invest for the long term. Low spending power has pushed down the price of medium-sized properties in outskirts areas like Thingangyun, Tarmwe and South Okkalapa to the K40-K50 million range,” he said.

U Wanna Phyo Zin added that falling demand resulted from a change in attitude towards buying property. “I can’t say exactly how much demand has decreased this year, but one thing sure is it won’t reach satisfactory levels compared with last year,” he said.

He added that people’s attitudes to buying property had changed.

“As a consequence of the cool climate, people that do buy property are treating it like any other commodity like cars or gold that can be sold in the short term; it’s no longer a long-term sole investment,” he said.