HOUSE OF THE WEEK
Refurbished twin-level apartment in Hlaing
TWO thousand and two hundred square feet split over two floors of freshly redecorated space for K90 million sounds like a pretty hot deal. more
Auctions weigh heavily on high-end property sales
(Volume 26, No. 513)
THE wave of privatisations carried out by the government has depressed prices at the high end of the real estate market, industry professionals complain.
The government began selling off state properties in 2007, but the pace of the selloffs has quickened during the final quarter of the 2009-2010 financial year as elections approach.
Real estate professionals say so many valuable government properties in prime locations have been, or will soon be, auctioned off that the interest of would-be investors in the regular real estate market has cooled.
This is even more the case because successful bidders at the government auctions can buy on terms much more favourable than on the open market. Instead of having to put up all the money immediately, the buyer only has to make a 25 percent downpayment, with generous time to pay the balance.
The State-owned Privatisation Committee put up only 211 properties for auction in Yangon in the 2008-2009 financial year, but that figure surged to 317 commercial assets in Yangon and another 79 nationwide during the current 2009-2010 fiscal year.
The assets on offer more recently are also in more desirable locations. Last year, it was properties in areas on the outskirts of Yangon like South Okkalapa, Yankin and Thaketa that went under the hammer. But this year the focus has been on commercial areas in Yangon as well as prime areas elsewhere.
U Khin Maung Aye, the manager of Shwe Kan Myay agency, said many auctions in the latter part of this fiscal year had affected the high end of the property market.
“There was only one privatisation last financial year, in January 2009, but there have been three big auctions already in the last quarter of this year. Privatisation doesn’t have much effect on medium-range properties priced between K200 to K300 million, but high-end prices are soaring.
“Investors wary about the forthcoming election are very interested in State auctions because of the favourable locations and the strong guarantees for buyers. That’s why sales of properties valued at K800 million and above on the open market fell by 20pc late in the fiscal year,” he said.
U Zaw Zaw, manager of Unity agency, said investors were staying away from high-end properties. “High-end properties sales dropped by 25pc this fiscal year compared with a year ago,” he said.
“Many of the properties privatised this year are in good locations. This is not only residential blocks, but also factories, warehouses and cinemas,” he said, adding that investor interest was focussed on the government auctions rather than on non-auction properties.
Successful bidders at government auctions pay 25pc down payment and the rest over a six-month period, but can request an extension, he said.
U Than Oo, managing director of Mundine real estate company, said the wave of government privatisations by auction had reduced investment in the property sector.
“The government privatised 110 assets in good locations in January, and 32 more blocks last month.
"The real estate market has been cool since the beginning of the year, and the successive state auctions have led to low investment in luxury properties of K800 million,” he said, estimating a 20-30pc decline in interest.
The government did not respond to a request for comment from The Myanmar Times
