Downtown Yangon is seen from Sakura Tower on the corner of Bogyoke Aung San and Sule Pagoda roads. Allowing foreign investment in the Yangon real estate market could spur growth in the city’s property sector as well as benefit the national economy, according to some of Yangon’s leading real estate agents.

INVITING foreign investment into Myanmar’s real estate market would help stimulate the property sector and its related industries as well as assist the recovery of the country’s sluggish economy, realtors in Yangon said last week.

“Allowing foreigners to buy homes, after relaxing some rules and regulations, will give developers a bigger market,” said U Than Oo, managing director of the Mundine real estate agency.

“It will also help local businesses earn more money as foreigners will also bring funds into the country to spend on other necessary items,” U Than Oo said.

Foreigners are currently prohibited from buying or owning any land or real estate in Myanmar under the 1987 Transfer of Immovable Property Registration Law. Only leases are allowed under the BOT (Build-Operate-Transfer) scheme.

U Than Oo said current regulations should be relaxed to allow foreigners to buy houses in Myanmar.

“Furthermore, we should create some incentives to attract them,” said U Than Oo, citing as an example a legally binding guarantee that land would not be renationalised in the future.

Construction projects should also be open to foreign firms, which would invest more money than local companies, he added.

Delays in construction of Yangon housing projects since 2005 have been attributed partially to a drop in demand.

“Without an active market, it is difficult for local construction firms to finance projects because they are relatively small compared with foreign companies,” U Than Oo said.

“From my knowledge and experience, local construction companies are having difficulty financing their projects. Their financial capacity is limited.

“Accordingly, capital accumulation in the Myanmar property industry from reinvesting of profits has been in gradual decline.

“The leading construction firms have shifted capital to other more profitable businesses, such as rubber plantations and government-assigned projects,” he said.

Lack of investment in the property sector over the past two years from industry giants like Yuzana Construction Co. Ltd and Olympic Construction Co. Ltd has led to a reduction in Yangon’s housing supply.

“In this situation, when government departments such as the DHSHD (Department of Human Settlement and Housing Development) are also occupied with special projects such as the development of Nay Pyi Taw and special economic zones, foreign companies should be invited to replace the local private sector,” U Than Oo said.

An official from the DHSHD said existing laws preventing foreign companies from developing properties in Myanmar were designed to protect local businesses, which would be vulnerable to foreign competition.

“The government gives priority to local businesses,” said the official, who declined to be named.

U Than Oo, however, said there were many advantages to opening the market to foreigners, including the arrival of technologies that were rarely available in Myanamr.

“Technology changes all the time. Local businesses cannot keep up with technological advances unless they are operating overseas because no foreign firms are working here,” he said.

An increase in the number of companies operating here would also foster stronger competition, U Than Oo stressed.

“The stronger the competition, the more new projects there will be in Myanmar. When the new projects are launched, people can buy homes at lower prices thanks to the greater supply in the market.”

U Maung Maung, managing director of the Shwe Gabar construction company, also said that allowing foreigners to buy homes in Myanmar would help companies finance their projects.

“It would mean an increase in demand for our properties and we could reinvest the profits in other projects,” U Maung Maung said.

However, he disagreed that foreign firms should be allowed to operate in Myanmar because, he said, there was no way local contractors could compete against foreign companies.

“The government should protect national businesses by giving them more opportunities,” he said,

U Than Oo, meanwhile, stressed that the implementation of new projects was crucial to meeting future needs.

“The migration of people from rural areas to the big cities, including Yangon, is growing,” he said.