Real estate agents say demand for industrial properties is down this year by as much as 80 percent.

NOW is a good time to look for industrial rental properties, a number of agents that specialise in industrial properties said last week.

Demand for rental properties at the Hlaing Tharyar Industrial Zone has fallen steadily since the overseas orders for garments and other exports began tailing off.

U Than Shwe, the manager of Hlaing Tharyar-based Prince Kanaung real estate agency said that in December the fall off in demand became obvious.

“Factory rentals have declined gradually since February last year as the global recession took hold and choked off orders for a range of different exporters.

“Demand for those factories that rely on overseas order is down by 70 percent in February compared with the same time in 2008, especially for those sites at Hlaing Tharyar zone 1, 2, 3 and 4,” he added.

One reason for this is that the investment required to start new garment factories is large compared with other commodities, he said, especially short-term investors who require factories that already have the equipment needed to produce items – in this case sewing machines. He added that garment factories also require more floor space, which increases the cost of renting them.

“Unlike factories that produce foodstuffs or household appliances, clothing machines are fixed so they are hard to reconfigure to produce other seasonal goods.

“With monthly rentals of K4 million for a 20,000-square-foot factory that includes 200 sewing machines, an electricity transformer and a proper telephone system is a vast investment. And it’s an investment that very few business owners or entrepreneurs are likely to risk during a global recession,” he said.

U Thura, the manager of Mahar real estate agency, which has catered to industrial zone properties for 10 years, said the significant drop in garment factory rentals had also pushed down prices.

“Demand has dropped by about 80pc since February 2008. However, owners have quickly realised that there is a problem and have already begun to lower their prices – from K120 a square foot down to K100,” he said.

U Thura said that in February 2008 he had five rental factories on his books but this year there is only one.

Market uncertainty is also pushing those willing to invest to think short term, he said.

“It’s all linked with the global recession and the rental conditions seem to be changing just about every month. Right now investors are only taking six or 12-month leases instead of the usual three-year contracts,” he said.

Daw Phyu Phyu Win, the owner of the Taw Win Myanmar garment factory at Hlaing Tharyar Industrial Zone 1, said she has decided to continue to rent her factory because she is concerned about her workers.

“We’ve run our own factory since 1996 and there’s no way that I can simply halt work at the factory, even though I don’t have many orders. Even still, I had 700 workers but have been forced to cut back to 400 since March last year because orders are down,” she said. “We’ve been able to continue because we’ve still got orders from Germany, Japan, South Afric and Taiwan that will see us through until August this year. We’ve also been a little lucky because other factories that have already closed down have forwarded any orders they’ve received to us,” she said.