Foreign investment in high-quality real estate set to rise in Myanmar


After an initial property boom in the first few years after political and economic reforms began in 2011, Myanmar’s real estate sector has faced some challenges in more recent years. The country’s main real estate market, Yangon, experienced peak office rental prices as high as $110 per sq metre in 2013 and 2014, putting it on a par with cities such as New York.

However, rental prices have dropped by an estimated 30% since then, as supply has outstripped demand while economic growth has moderated. Mainly due to a lack of clarity in land and property laws, as well as unease regarding the authorities’ response to unrest in Rakhine State, the real estate sector has not maintained the performance levels anticipated in previous years.

Nevertheless, there are reasons for optimism. Ongoing efforts to improve the business climate and liberalise key industries, such as retail and financial services, should result in improved economic performance and investor sentiment over time, which would have a positive impact on real estate demand. Meanwhile, planned mega-projects, such as New Yangon City (see analysis) and New Mandalay Resort City, have the potential to reinvigorate the sector, and stimulate demand for high-quality residential and commercial properties in the country’s two main urban centres.

Foreign Investment

In FY 2017/18 Myanmar attracted $5.7bn in FDI, a 40% decline from the previous year, according to the Directorate of Investment and Company Administration. This has impacted the real estate sector, in part as a result of limited business expansion in the local market, a lack of market entrants and the consequent reduction in overall demand.

In addition, after years of demand comfortably outstripping supply, the construction boom in recent years has seen somewhat of a role reversal. Although some large-scale real estate projects have been held up by construction delays, a number of major projects have come on-line, including Junction City in downtown Yangon and Myanmar Plaza in the northern Yankin area.

“The strong initial wave of interest that we saw during 2013 to early 2015 has continued to decline, while supply has increased,” Richard Emerson, managing director of Emerson Real Estate, told OBG. “With foreign companies reluctant to invest, it has been a fairly challenging environment for landlords in 2018.”

Legislative Changes

undefined Broader moves to improve the business environment and stimulate private investment are encouraging signs that sector activity will improve. The government introduced the new Investment Law in 2016 and the new Companies Law in 2018, which together create more legal certainty for international investors (see Trade & Investment chapter).

Additionally, an announcement made in November 2018 by the Central Bank of Myanmar (CBM) to ease restrictions on foreign banks lending to local businesses could enable much needed investment and capital injections to the real estate sector, where access to finance remains a major obstacle.

In terms of legislative changes specific to the real estate industry, one of the most significant developments was the enactment of a new Condominium Law in January 2016, followed by the issuance of the enabling rules in December 2017. The Condominium Law and enabling rules allow foreigners to own up to 40% of the total floor area of condominiums without any residency or employment requirements.

However, the publication of the enabling rules failed to clear up a number of ambiguities and highlighted a wider problem of overlapping laws and rules. By law, property buyers are required to prove that the land on which a condominium block is built is collectively owned, while also registering their individual unit. However, the administrative bodies required to facilitate this process were not yet in place as of December 2018. According to Emerson, the new rules had been returned to Parliament, creating continued confusion in the market. “The lack of clarity regarding the law has created much uncertainty,” he told OBG. “However, the government appears to be finalising the mechanisms under which the new law will operate, and we expect to see positive changes in 2019.”


In terms of sector regulation, there are a number of government bodies that are involved in the real estate market, including the Ministry of Construction, and the Ministry of Planning and Finance. In addition to ministries at the federal level, there are also regional entities involved in real estate projects. With the majority of high-value projects being developed in Yangon, one of the most important stakeholders in the country is the Yangon City Development Committee (YCDC), which oversees administrative duties in the capital, including the construction of new projects.

Thus, some of the major challenges for real estate developers in Myanmar include the need to negotiate with several ministries and government bodies that follow their own procedures, as well as overlapping and constantly evolving laws, rules and regulations.

General Trends

One of the most positive trends has been the proliferation of large, international-standard retail projects, especially in Yangon. Retail projects have also been developed or planned in some secondary cities, though they tend to be of a lower quality with less leisure and entertainment activities available.

Although some of the projects have been hit by construction delays, major developments in Yangon are expected to be completed in early 2019. These include the Kantharyar Shopping Mall, part of the Wyndham Grand Yangon Hotel and Central Boulevard. In November 2018 property research company Colliers predicted that an additional 150,700 sq metres of retail space will be available in Yangon in 2019.

New Resort

There are also an increasing number of developments outside of Yangon. For example, Myanmar’s second biggest city Mandalay is quickly becoming an economic hub in the north of the country and offers significant real estate potential. In particular, the planned New Mandalay Resort City project has attracted a lot of international interest. A total of 39 companies submitted expressions of interest in 2018 to develop the 4050-ha IT development-based resort city. The project will be carried out in three phases, with the national government overseeing the development of phases one and three, and the regional government responsible for phase two. Khin Myanmar Development, Central Irrawaddy Development and Shwe Taung Development were selected as three preferred bidders in June 2018; however, in the following month the regional government called for a review so that only one company is put forward as the main developer. Whether or not this suggestion was met was not yet disclosed as of December 2018. When complete, the new resort city will feature industrial, housing, agricultural, education and health service zones, as well as leisure facilities.

Major Developers

One of the largest developers in Myanmar and one of three successful bidders for the New Mandalay Resort City project is Shwe Taung Group, a large conglomerate that also has interests in construction materials and the distribution of machinery.

The group is best known for the construction of large-scale mixed-use infrastructure projects. Its subsidiary Junction Centre Group owns six such properties across the country, including one in the capital city Naypyidaw. Its most high-profile project is Junction City in downtown Yangon, which includes an office tower, retail space and a high-end hotel.

Another big player in the country’s real estate market is Singapore-listed Yoma Strategic Holdings, which falls under the investment holding group operated by Serge Pun, a Myanmar businessman. Major real estate projects led by the group include the Star City residential complex on the outskirts of Yangon, as well as the Pun Hlaing Links golf club in the west of the city. Its latest major project is the Yoma Central and The Peninsula Yangon, a mixed-use development on which it is collaborating with several international firms and finance institutions, including Mitsubishi and the Asian Development Bank. The project, set over 4 ha and expected to cost $400m to develop, will include retail space, a high-end hotel, two office towers, residences, a business hotel and serviced apartments.

Other major developers present in Myanmar include Marga Landmark, part of the Marga Group, which is currently developing a $300m mixed-use project in Yangon. The undertaking will feature several residential towers, a commercial office space and a shopping mall.


The enactment of the new Condominium Law in early 2016 and enabling rules in late 2017 was intended to encourage international investment in the real estate market and boost much-needed foreign exchange earnings. One of the most significant areas clarified by the rules was that foreign investors could own up to 40% of units in a condominium block. Originally, the law stated they were only eligible to own 40% of units above the sixth floor.

However, lingering legal ambiguities and delays in establishing the administrative bodies required to facilitate foreign investment in condominiums has meant that the much hoped-for injection of foreign capital has not yet materialised and the residential market remains relatively stagnant. According to Colliers, the mid-market condominium segment was the best performer in the second quarter of 2018, with sales increasing by 1.8% on the previous quarter, despite the average price increasing by 2% to $1487 per sq metre.

In contrast, no movement was recorded in take-up rates or prices in the high-end and luxury segments in the same quarter. The report found that prices for high-end condominiums remained unaffordable for most residents, in part because the large units drove up costs. The condominium market has also been slowed down by what Colliers calls a “wait and see” approach adopted by developers as they search for greater clarity regarding the application of the Condominium Law.

In 2018 there were indications that banks were becoming more inclined to offer flexible loans to the real estate sector. Stakeholders have broadly welcomed this development after a period of weaker credit growth. Renewed lending would provide a much-needed boost to the real estate industry, which has long been hampered by a lack of access to capital or viable mortgage market (see analysis).

Another positive development occurred in November 2018 when the CBM announced that foreign banks can provide financing and other banking services to local companies (see Banking chapter). The change applies to the 13 foreign banks that have established representative branches in Myanmar since 2015, although corporate lending activity is likely to be constrained by the CBM-imposed limits on interest rates and variations in corporate governance standards.

Affordable Housing

Recent changes in the banking sector could perhaps have a significant impact on the affordable housing market. Despite rapid economic growth over a prolonged period, an estimated 32% of the population lives below the poverty line, according to a 2015 study conducted by the World Bank.

The government has indicated that addressing the affordable housing deficit is a priority and aims to facilitate the construction of 1m additional housing units nationwide by 2030. Almost 11,000 homes were constructed in the first two years of the NLD-led government, with just over half of these fully finished, according to local press in November 2018. In March 2018 Parliament approved a MMK189bn ($133.7m) loan from the Japan International Cooperation Agency to finance the construction of approximately 12,000 new affordable housing units by 2020.

However, there are significant challenges to the realisation of the government’s ambition to facilitate the construction of 1m affordable homes, not least in incentivising private developers to invest in a segment perceived to deliver relatively low returns, while also encouraging banks to lend to low-income earners aspiring to become homeowners.

Nevertheless, Yoma Strategic Holdings and sister company First Myanmar Investment announced in June 2018 they will work together to construct housing units that would target the country’s mass market under a new entity, Yoma Land. “The low end of the market offers significant potential as there is a huge demand,” Melvyn Pun, CEO of Yoma Strategic Holding, told OBG. “The challenge will be ensuring that affordable housing can be profitable for real estate developers and investors. There are plenty of investors willing to invest in the high-end luxury segment, but there is insufficient demand to justify investment.”

This sentiment is echoed by Hugo Slade, managing director of Slade Property Services, who told OBG that “although there is interest from Chinese investors for quality assets, the current level of demand does not warrant further investment”.

As well as engaging in extensive market research to deliver projects that seek to meet the needs of the mass market, Yoma Land should also be able to tap international finance thanks to Yoma Strategic Holdings’ listing on the Singapore Exchange. The new company has also extended the home loan repayment period from the current seven to 10 years to as much as 25 years.

Informal Settlements

In 2016 the Yangon regional government estimated that there were 430,000 informal settlers – usually referred to as squatters – in the commercial capital. It made the resettlement of squatters a priority when it assumed office in 2016 and commissioned a survey to enable the formulation of data-driven solutions.

As of May 2018 the regional government had issued 167,738 smart ID cards to squatters, which should give them priority for resettlement in low-cost housing projects, although local media reports suggest a black market has emerged for the sale of smart cards.

As well as conducting the survey and issuing smart cards to squatters, U Phyo Min Thein, the chief minister of the Yangon regional government, told local media in August 2018 that his administration was currently searching for land where they could construct housing and sell it to informal settlers using affordable, long-term finance options. U Phyo Min Thein said that he hoped the project would involve input from foreign companies once the land was secured.


Myanmar’s commercial real estate sector has also struggled from the slowdown in foreign investment and the increased supply of office spaces during a period of falling demand. In the third quarter of 2018 the average citywide rental office rate in Yangon was $42.10 per sq metre per month, down 2% on a quarterly basis and 7% on a yearly basis, according to Colliers. The research company suggested that the downward correction in office lease rates in the Yangon region was leading to a more competitive market, with tenants increasingly seeking quality.

While affordability and location were key considerations in the past, high-quality development projects in recent years, such as Sule Square and Junction City, which opened their doors in 2016 and 2017, respectively, have changed the expectations of tenants. Among the issues that they are concerned with are security and safety standards, and staff accessibility.

As of the third quarter of 2018 occupied office stock totalled over 300,000 sq metres, an increase of 21% year-on-year, while the occupancy rate was three percentage points higher on the previous quarter. Colliers expects eight projects to be completed in Yangon in 2019-21, which would provide an additional 225,800 sq metres to the city’s leasable space. While these figures suggest a healthy market, the pace of absorption has slowed. Nevertheless, if the government follows through on investment-friendly reforms and the liberalisation of key industries, then the prospects for the office market look set to improve in 2019 and beyond.

Leisure & Retail

The leisure and retail segments have evolved considerably over recent years, driven by the completion of international-quality retail spaces in Yangon. These spaces tend to offer more food and beverage outlets and entertainment options than malls in other areas of the country. Data compiled by Colliers in the second quarter of 2018 revealed that leasable retail stock totalled 348,000 sq metres.

Additionally, in August 2018 the Ministry of Commerce announced regulatory reforms that will open up the segment to allow foreigners 100% ownership in retail activity, further demonstrating government efforts to attract foreign capital into the country and drive demand for retail spaces.

As the country’s youthful, technologically literate population has widespread access to smartphones, developers are increasingly looking to incorporate smart solutions in the design and service provision of retail and leisure projects, including mobile apps and Wi-Fi access. Colliers suggested that retail developers could also consider integrating health and wellness services, including fitness centres, spas and medical services into their shopping malls.

Meanwhile, large retail and leisure centres offering a variety of affordable food and beverage outlets have proved successful in attracting footfall and have established themselves as destination malls for citizens looking for locations in which they can socialise away from the busy streets of Myanmar’s urban centres.


The industrial real estate segment has been bolstered by growth in the garment industry (see Industry chapter), and the fast-moving consumer goods and logistics industries. The garment business in particular has been one of the strongest performers in the economy, with exports leaping from $1.5bn in 2014 to $2.7bn in 2017, buoyed by EU trade privileges granted in 2013 on the back of progress in economic and political reforms. In comparison to competitors such as Bangladesh, Cambodia and Vietnam, Myanmar’s garment sector generally specialises in higher-quality, more technical garments, and its competitive advantages include relatively low wages and a large labour supply.

But the long-term success of the industry is somewhat precarious, especially after the EU announced in October 2018 that it was considering suspending trade privileges for Myanmar over its handling of unrest in Rakhine State. Such a move could have a devastating impact on an industry that employs an estimated 450,000 people, and could lead to falling demand for industrial properties and warehouses.

To offset this scenario should it arise are the planned industrial zone developments in the New Yangon City and New Mandalay Resort City projects, which should lead to a significant increase in high-quality industrial facilities that could stimulate growth in manufacturing over the medium to long term. Serge Pun, CEO of New Yangon Development Company, a group formed to oversee the development of the region’s new city, told international media in November 2018 that the new industrial zone west of the Yangon River would attract Chinese and other international companies seeking to relocate their operations to mitigate the risks and high costs resulting from the ongoing US-China trade war.


Land rights issues continue to be a major challenge in Myanmar, primarily due to the legacy of land confiscation by previous governments. Although recent successive governments have vowed to tackle the issue, state land rights groups estimate that millions of hectares of land across the country are considered to have been confiscated, which creates a lack of clarity on land ownership and development rights.

High land prices have been a major issue since the 2011 reforms and are often a hindrance to real estate development. This problem is exacerbated by the need for land as collateral for bank loans and the fact that many Myanmar citizens prefer fixed assets such as land over bank savings, due to lingering mistrust of the financial system. As demand for land rises in line with Myanmar’s rapid economic growth, landowners sometimes prefer to hold onto their land in the hopes of driving up prices further. In a bid to tackle this issue, the NLD-led government has vowed greater scrutiny of owners of inactive land in industrial zones; however, enforcement remains limited.

“For the past 60 years, landowners have speculated on the price of landholdings,” U Sai Myo Win, CEO of real estate developer Excellent Fortune, told OBG. ”This has created a speculation bubble, hampering further development of the sector. Managing this issue will be a very difficult task for the government, as the two possible outcomes – bubble burst or continuity – will result in severe consequences for the economy.”


Although the residential and office segments have undergone a downward correction after an initial property boom post-2011, the prospects for 2019 and beyond appear bright, despite ongoing ambiguities in land rights and foreign ownership of condominiums. As the country continues the slow yet steady progress of economic liberalisation and the enactment of investor-friendly reforms, demand in both areas should gradually rise.

For renters, the frustration towards paying one year’s rent upfront is gradually lessening, and the fact that prices are becoming more competitive gives renters and buyers more power, leading to increased confidence in the market. Meanwhile, previously overpriced low-quality houses and apartments will need to improve in quality or have their prices lowered if they are to attract clients, which should help to address imbalances and inequalities present in the market.


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The Report: Myanmar 2019

Construction & Real Estate chapter from The Report: Myanmar 2019

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