Interview: U Aung Zaw Naing
What kind of steps can be taken to reduce financial speculation and ensure the availability of affordable land for industrial projects?
U AUNG ZAW NAING: The increase in land prices has been underpinned by the improved political landscape and the opening up of the economy in Myanmar, leading to a rise of confidence among global investors. As the country is currently undergoing a rapid transformation, including an inflow of international investment, some forms of speculative activity in land and real estate will be unavoidable. Nevertheless, we believe in the fundamentals that underpin the demand for land and real estate, as well as in the long-term economic prospects for the country.
As a consequence, demand for industrial land has been driven by investors and multinational companies expanding into Myanmar. To satisfy this strong demand and requirements from all stakeholders, we believe that a well developed public-private partnership (PPP) between the Myanmar government and established developers would be the right formula. This PPP could take the form of a joint venture, where the government provides land and the developer plans the infrastructure and amenities.
What are the major trends with regards to financing for developers and contractors in Myanmar?
AUNG ZAW NAING: Currently, the availability of financing in the real estate industry remains limited compared to other developing nations. Developers and contractors are primarily constrained by high financing costs and lack of bankable assets. The government’s drive to improve the legal framework in the fields of finance and ownership will widen the range of funding options going forward.
The impending enactment of the Condominium Law, for example, will further enhance confidence in real estate and construction industries. We expect this process of economic and legal reforms, together with the inflow of funds from foreign investors, to facilitate financing activities for developers and contractors in the near future.
How would you evaluate demand for residential and non-residential construction projects?
AUNG ZAW NAING: Demand for residential and nonresidential construction projects has been driven by two major trends: the current situation of undersupply and the lack of high-quality developments. Our experience so far is that there is a flight to quality in the real estate market. There are plenty of buyers and investors who are willing to pay the right price for high-quality and well-built projects. We expect this trend to persist in the near term.
Indeed, together with stable economic growth and strong foreign investments, we can expect to see a sustainable increase in demand for real estate projects that meet international standards. Moreover, with the eventual enactment of the upcoming Condominium Law, we can also anticipate continued interest from foreign investors in both residential and non-residential projects in Myanmar.
Which sectors do you expect to drive the construction industry over the next three to five years, and can this drive be sustained?
AUNG ZAW NAING: Myanmar is currently experiencing a unique situation whereby demand in every industry is outstripping supply. This bodes well for the construction and real estate industries here. Each sector is expected to contribute significantly to the growth of the economy and to urban development.
The country’s infrastructure projects such as roads, rails, bridges and transportation networks will dovetail with increasing demand for public housing, private residences, offices, malls and hotels. This demand will be driven by an increasing population and higher consumer spending power. We expect across-the-board growth such as this as well as demand to fuel the construction industry over the next five years.
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