RENTAL prices in the Ayeyarwady delta and on the way down, at least in some areas, and some owners are being forced to adopt flexible price attitudes, a number of sources said last week.
When NGOs began flooding into the delta to begin their reconstruction programs in the aftermath of Cyclone Nargis, prices for rental properties skyrocketed as different organisations sought out the best sites.
“Houses currently renting for K500,000 were only K50,000 before the NGOs came in,” one real estate broker said.
The township of Bogale still has about 50 NGOs working within it but the demand for real estate has finally dropped below supply, with rents heading downwards.
U Ko Htwe, the owner of Mya Thein furniture in Bogale’s 5th ward and ex-chairman of the ward, has been liaising between NGOs and property owners since late May last year.
“Rental prices were terribly high at the start. At their peak around two months after the storm, some buildings were renting for K1 million a month. However, they can now be rented for half that,” he said.
He added that some organisations, including Medicine Sans Frontieres Holland (AZG) were only operating during the emergency phase of the recovery and have now pulled back, there is more than enough real estate available to satisfy demand and owners are having to negotiate to rent their properties.
However, U Ko Htwe said NGOs bore the responsibility for the initial skyrocketing of prices, which resulted in rental prices far higher than had ever been seen in the region.
“It started with Medicine Sans Frontieres Holland [AZG Holland] agreeing to pay K1.2 million a month for a two-storey brick house and continued upwards from there.
“Residents of Bogale just didn’t know how to make offers that high,” said U Ko Htwe.
The building rented out by AZG was previously used as a wedding reception hall, he said.
“Before the cyclone, most of these places were virtually unoccupied; only governmental officials regularly visited for extended periods and they would hire cheaper houses for around K40,000,” said U Ko Htwe.
The real estate broker who assisted NGOs to rent properties in Bogale, said some buildings being rented for K500,000 now were only getting K100,000 before Nargis.
“Even then most residents in Bogale couldn’t afford that kind or rent,” she said.
Average rental prices paid by NGOs now vary from K300,000 to K1.2 million.
She said UNICEF is currently paying K1.1 million for their two-storey building, while International Organisation for Migration (IOM) is paying between K400,000-800,000 for its three properties; OCHA (Office for the Coordination of Humanitarian Affairs (OCHA) is spending K800,000; while World Food Program and UNDP are renting properties for K600,000. Care Myanmar is spending the least for its K300,000-a-month site in Bogale.
“Some NGOs and aid agencies have already left, including OCHA, and that’s why the house owners are reducing rents,” said the person.
World Vision, for instance, was paying K800,000 for a property in Bogale but is now paying only K600,000 since the start of May this year.
“Prices should be going down because they were really high. We said we couldn’t afford to pay that anymore and they [the land owner] dropped the price,” said one World Vision worker.
