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Yangon Weather Forecast, Burma

Discounts abound in flat market

DISCOUNTING is a not-so-novel method of unloading any given commodity. But construction companies in Yangon have been using discounts to sell large numbers of apartments since 2007, with the practice picking up steam in 2009 and continuing into this year, a number of company spokespeople told The Myanmar Times last week.

The discount sales, often called “promotions”, are helping the companies and developers keep cash flowing, said U Lazarus, the managing director of Yadana Shwe Htun construction.

“The discount market has really flourished in the last year because the market has been cool since at least early 2009,” he said.

Another real estate industry insider said companies are sometimes willing to slash 20 percent off the cost during discount periods, which typically surround important holidays like Thingyan or Thadingyut. Some companies also hold sales during the dull monsoon months.

However, the practice varies from company to company, and from customer to customer, U Lazarus said, adding that the discounts also vary depending on the condition of the property in question.

Developers are usually more willing to offer bigger discounts and/or instalment payment plans on unfinished sites and are more rigid on completed projects, he said.

“Some people try to negotiate on the decoration and flooring included in an apartment. And if the apartment is on one of the higher levels, the developer might be willing to offer a bigger discount.

“But it’s still rare that any developer will sell at a loss,” he said.

U Ko Ko Lay, director of Three Friends construction, said offering discounts did help to generate short-term cash flow but showed the market was still unhealthy.

“This scheme is effective for individual companies because it does improve sales but it’s not going to influence the whole industry, which is still cool overall,” he said.

He added that the discounts are only offered on apartments, not houses.

Ko Min Min Soe, a spokesperson for Pan Tha Khin real estate agency, said that buyers looking for discounts target unfinished sites for investment.
“The customers who intend to live in the apartments themselves are mostly looking for finished sites but those who want investment properties pick unfinished blocks hoping to buy through instalment and maybe getting a discount as well,” he said.
Daw Khin Pyone Kyi, who lives in Hledan township, said she had recently found herself a new apartment with a 20pc discount in Ahlone township but then encountered a hitch that may be symptomatic of the whole industry.
“I found an apartment that I liked at a construction exhibition and was able to bargain the price down by 20pc to K46 million, which I would have been able to afford when I sold my other apartment.
“But in the end I had to give up because I just couldn’t find a buyer for my apartment,” she said.
Daw Khin Than Lwin, a consultant with Father Land construction, said apartments worth between K30 million and K150 million are the most saleable properties on the market. She added that developers determine the size of their discounts depending on overall cost of a given project but this figure rarely exceeds 30pc.
“I think it’s a kind of win-win situation: Customers can buy new apartments at reasonable prices and the company can get much-needed sales.”

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