One of Yangon’s biggest projects, Maw Tin Towers, in Lanmadaw township is still under construction. Pic: Hein Latt Aung

YANGON’S construction industry is feeling the impact of the global recession – investment money has dried up, and land and apartment prices are either stagnant or down.

And yet, none of the major government-private joint ventures have been handed back to the government, one Yangon City Development Committee (YCDC) building department official said last week.

“Many major construction projects have been delayed, but none of them has been abandoned, with all responsibility handed to the government,” the official said.

In fact, of the seven major projects in Yangon – Gamone Pwint Condominiums in Mayangone township, Shwe Mya Yar Housing Project in Mingalar Taung Nyunt township, Tet Khan Project in Mingalardon township, Maw Tin in Lanmadaw township and the three Min Dahma Projects in Mayangone township – three have already been completed.

“No developer or developers have returned any projects to the committee in late 2008 or early 2009. We have seven big projects with the developers and three have already been finished,” the official said.

A spokesperson for the Myanmar Construction Entrepreneurs Association (MCEA) said the developers involved in these projects – which include Htoo Construction, Gamone Pwint Construction, Tet Khan and Olympic Construction – have government deadlines to contend with and have little choice but to continue, despite the economic climate.

New joint ventures after 2004 operate under a 60/40 private to government split. Such ventures were previously divided 80/20.

However, many have been discouraged from taking part in new ventures because of the extended waiting times to recoup the money.

The YCDC official said it would be unfair to blame the construction delays on the financial crisis because the delays predate the global meltdown.

“We can’t really say the global recession is causing these construction delays because there are many factors why these projects are stagnant. And some of the larger projects are continuing,” the official said.

The official said the four remaining huge projects are the Maw Tin Tower in Lanmadaw township and three Min Dhamma towers in Mayangone township.
“These are nearly finished. The developers will hand over to the government as soon as they are complete.

The MCEA official conceded that projects had been handed back to the government in the past but said that hasn’t occurred recently.

“Some smaller projects were returned to the government two or three years ago, but none recently. The developers had finished the foundations of these projects but stopped work when they realised that they would not see any quick profits.”

U Ko Ko Htway, the chairman of Taw Win Family Construction, said developers are stuck between a rock and a hard place: Projects have been built over the past few years when building materials were expensive, leaving developers with comparatively overpriced investments because construction material costs are down across the board now.

He said developers cannot reduce the prices on these properties without losing money.

The result, now being seen, is a glut of apartments, houses and condominiums that are seen as overpriced by the market but whose owners are steadfastly refusing to lower their prices.

U Ko Ko Htway said developers are looking at other ways to generate sales.
“The way for us to survive this is to promote sales by letting buyers pay in installments over one year, which has been the status quo for a while anyway. But we need to extend the period over which buyers can pay their installments. This is not a good time for us,” he said.

“It’s difficult because we need to sell apartments and properties to generate cash flow but know that we’ll be losing money if we lower our prices,” U Ko Ko Htway said.

Some construction firms have begun advertising extended installment periods in newspapers, including Tet Lan Construction.

In the February 13 edition of the state-run Myanmar Ahlin newspaper, Tet Lan took out a half-page advertisement detailing its extended installment periods.

These include extending the installment periods for apartments to two years, while condominium purchases can be spread over three years, the advertisement states. Purchases still require a 40pc upfront payment.