Men install a transformer outside the MMG Tower on Strand Road in downtown Yangon.

THERE’S nothing like the confiscation of property to hammer home a message to the construction industry. After making just such a threat in March this year, the Department of Human Settlement and Housing Development is seeing its warning bear fruit as two previously stalled housing projects near completion.

The Shwe Mya Yar Housing estate in Mingalar Taung Nyunt township and the MMG Tower in Botahtaung township are both expected to be finished by the end of September, when the developers will hand over 40 percent of the apartments to the government stakeholders, the DHSHD and the Yangon City Development Committee.

The winding down of construction as work at the sites nears an end is good news for the authorities, who have seen projects languish for months as developers opted not to push ahead with building amid a cooling housing market.

In June 2006, the government put developers in a further bind when it changed its income sharing ratio for estates being built on government-owned land from 80:20 in developers’ favour to 60:40 for existing projects. Income from projects starting after June 2006 must be split evenly among the private developer and the government department owning the land.

Of the 74 affected projects underway when news of the changes was sprung, none have so far been completed. But the Shwe Mya Yar and MMG Tower projects are set to change that, having been spurred on by the warning that land and any capital developments on it would be forfeited if construction did not resume.

The DHSHD earlier said the industry had responded quickly to its warning in March, with the seven sites repatriated by the department shortly after its initial notice being the only casualties.

“We are glad to see them developing again and we really appreciate what the developers are doing to help us. If progress continues to be made on the projects like it is now, they will all be finished by the end of 2009,” U Myint Swe, a deputy director with the department, told The Myanmar Times in May.

The Shwe Mya Yar estate is a collection of apartment blocks and townhouses spread over 6.93 acres of land owned by the YCDC. Work began in 2003 and was initially expected to finish in 2005.

The project’s developer, Ngapali Construction Co., said only some interior work remains to be completed and attention is now focused on recouping expenses through sales.

“We hope we’ll be able to get some of our investment back by selling the properties. That’s why we finished the project under some financial difficulty,” the company’s director, U Myint Lwin, said.

He added that the firm had utilised income from its trading enterprises to fund the work.

At the 12-storey MMG Tower on Strand Road – renamed in July from the Yangon River View Tower to highlight the developer, Maung Maung Gyi Construction and Trading Co., Ltd – 30 of the 70 apartments will go to the DHSHD, which owns the 11,500-square-foot plot of land.

“At first, we agreed the company would provide the DHSHD with 15 apartments,” said company president U Maung Maung Gyi, who cited escalating construction costs as adding to the firm’s woes.

Started in 2004, the tower was estimated to cost K1.5 billion but has so far climbed to more K2 billion, he said.

“It was the toughest time I’ve ever experienced. The prices of construction materials increased and my share of apartments was reduced,” said U Maung Maung Gyi.

He added that he was now looking forward to the opening of the tower one month from now and that he hadn’t bothered to calculate if the company would make or lose money on the project.

“I’m just glad to have finished the project and to have gotten through all that pressure.

“I only thought about my reputation and the need to have every assigned job done on time,” he said.

Some apartments at the tower had been sold long ago with payments made in instalments, which U Maung Maung Gyi said helped finance the project but also made it essential his company finished it to the satisfaction of the homebuyers.

Now, U Maung Maung Gyi says he can look at the tower with pride.
“Everybody likes it. It’s downtown right beside the river and you get fresh air without pollution from morning to night,” he said.

MMG Tower is located in one of the most storied parts of Yangon, between 41st and 42nd streets in a neighbourhood home to some of the city’s most precious heritage buildings.

“It’s rare for there to be such a modern building on Strand Road as space is so limited,” U Maung Maung Gyi said, pointing out that the MMG Tower is the tallest structure on the street.

U Myint Lwin of Ngapali Construction also said location was a key consideration in pushing ahead with the Shwe Mya Yar project, which will include a shopping centre called 21st Century that the company says will fill a void in the area for such retail experiences.

“It was the location that gave us incentive to finish the project,” U Myint Lwin said. “We expect we’ll be able to make sales at good prices that will cover our investment.”

Other developers in Yangon, however, have less confidence in their partly built estates.

U Maung Maung, managing director of the Shwe Gabar Maung Maung Construction Company, said he stands to lose millions of kyats from his Mindama housing estate because of changes to the income-sharing policy.
Being built on a seven-acre plot owned by the DHSHD in Mayangone township, U Maung Maung said location was working against him in this case.

“If it was in a very popular location like downtown, I wouldn’t have to worry about losing money, I’d be able to sell them at good prices,” he said.

But farther from the city’s commercial centre was a different market, something U Maung Maung said he hoped the government would consider for developers in situations like his own.

U Myint Swe of the DHSHD dismissed that suggestion, however, saying on August 13 that there would be no adjustments to the income-sharing ratio as the government had already considered the long-term development of the construction industry.

“Therefore, I’d like to encourage all developers to keep their good reputations for a certain period by developing good-quality houses.

“Even though sale prices cannot cover their expenses, there must be room for those who produce good work,” U Myint Swe said.

He added that the department appreciated the effort made to finish the MMG Tower.

“It will help develop the city with a modern appearance,” he said.