New projects are attempting to bridge the housing supply gap

Major demand for real estate is being driven by Myanmar’s significant economic growth, and market participants are looking forward to the arrival of new foreign investors. Thanks to the current government’s economic and political reforms since 2011, Myanmar is seeing broad growth in sectors such as oil and gas, telecommunications, manufacturing, construction and tourism. With new arrivals, the demand for office and living space has spiked tremendously, putting a huge burden on Myanmar’s existing real estate stock.

Developers are working on numerous high-rise projects in Yangon, but they are restrained by the limited availability of prime land and domestic financing. Foreign buyers, meanwhile, are still unable to own housing following the delay in the passing of the Condominium Law, which would have given them the right to purchase apartments. Land scarcity has also resulted in high prices. With demand far outstripping supply, both international developers and local contractors are rushing to deliver offices, apartments, hotels and retail spaces.

New Legislation

While Myanmar implemented the Foreign Investment Law (FIL) in 2012, the much anticipated Condominium Law has been facing delays. Under the FIL, the Myanmar Investment Commission (MIC) permits foreign companies to invest in real estate development either through a joint venture or through a build-operate-transfer (BOT) lease agreement with the government.

Under the joint venture scheme, foreign participation is limited to 80%, while local citizens or enterprises must own at least 20% of the equity. BOT agreements, however, allow foreign investors 100% ownership on leases for up to 50 years, with two additional, optional 10-year extensions.

The proposed Condominium Law, meanwhile, would allow foreigners to own up to 40% of flats in a condominium project, all above the sixth floor. This law was to be implemented in early 2014 but is still undergoing review by lawmakers. A local report in December 2014 stated that the law will be sent back to parliament in January 2015, and local developers believe this law will be implemented near the end of 2015. This delay has caused some concerns but has also done little to deter the huge demand for real estate in Myanmar. “Prices are still very high and most people remain unable to purchase property,” Brett Miller, managing director at real estate consultancy Scipio Services, told OBG.

Office Space

Office rents in prime buildings in Yangon are the highest in the region, even rivalling those in Singapore. Some reports have said that rentals in Yangon are even higher than in Manhattan. For example, a report published by real estate firm Colliers International Myanmar in the first half of 2014 stated that Yangon’s average monthly rental stood at $87 per sq metre, well above the closest regional rival, Singapore, where the average rent was $73 per sq metre. According to Yangon-based Scipio Services, this is up from an average of $50 per sq metre in mid-2011.

The Colliers report indicated that rents had continued to increase throughout 2014, but at a lower rate than in 2012 and 2013. Despite the apparent slowdown, Colliers predicted office rental rates in Yangon will rise by more than 25% in the next two years.

Yangon’s office stock currently stands at 112,000 sq metres, with more than 330,000 sq metres of new projects in the pipeline and scheduled to be completed through to 2018.

Local Interest

The demand for real estate is not only coming from foreigners but also from locals whose own prosperity is improving with the increase of investment into the country. In August 2014, the Ministry of Immigration and Population’s provisional census data showed that Myanmar’s population stood at 51.4m people. Yangon is the most populated city with 5.21m people, followed by Mandalay (1.23m) and the capital city, Naypyidaw (1.16m). The census data also showed that there are 14.8m persons living in urban areas throughout the country with, the Yangon region having the highest urban proportion (70.1%). The data also showed that the most densely populated region is Yangon, with 723 people per sq km, followed by Mandalay, with 206 per sq km. With real estate developments largely concentrated in urban areas, the government is looking to ensure that housing is affordable for the general population. Accordingly, residential construction, valued at $1.5bn, takes up a major portion of Myanmar’s construction investments.

Urban Projects

A number of housing developments are under way, including phase two of the 5000-unit Star City Thanlyin on the south-eastern outskirts of Yangon and two sites in Dagon Seikkan, which are set to include a total of 17,000 units between 48 towers. Major local developer Shwe Taung has a number of residential projects including Crystal Tower, Malikha Garden housing, May Kha Home Place and The Twin Centro Condo. “We have sold out almost 90% of the Twin Centro project and 60% of our Crystal Tower project. The majority of the buyers are locals, with maybe less than 5% being foreign companies,” U Han Thein Lwin, managing director of High Tech Concrete Technology , told OBG.

The company has also started work on a new development project in Yangon, known as Junction City, which is planned to be a 6.5-acre development offering a 32-storey modern apartment building, a five-star hotel, shopping complex and office space.

Besides major projects, land prices in Yangon are now beyond the affordability of many locals. In areas around the city’s downtown, land can fetch as much as $10,000 per sq metre. To overcome the rising land price, the local government introduced fixed tax rates on the sale of property in the city in October 2014. Prices have since stopped rising, as high-value transactions have slowed; however, rental rates continue to climb on the back of increasing demand and limited supply.

Affordable Housing

Meanwhile, in order to provide affordable housing options, the Myanmar government has enlisted the assistance of construction companies to develop low-cost, affordable housing projects. The government is also directly involved in building low-cost homes, but the numbers are very insignificant compared to the surging demand. In March 2014, the Department of Human Settlement and Housing Development announced that it was planning to build 30,000 new low-cost homes in townships outside Yangon in 2015-16. However, the department is concerned over the price of building these low-cost homes, as the final price is estimated to be between $10,000 and $12,000 per unit, excluding the cost of the land.

High Rising

The latest development in the city is the 68 Residence, a 27-storey condominium building that will boast 369 apartment homes. Located in Bahan township at the corner of Kabar Aye Pagoda and Sayar San roads, this project will be ready in 2017. According to Colliers International, the major real estate projects in Yangon presently include the HAGL Myanmar Centre with $440m worth of investment, The Landmark ($350m), Dagon City 1 ($300m), Golden City ($230m) and Kantharyar Centre ($125m).

Hoang Anh Gia Lai Group (HAGL) is a major Vietnamese developer-builder that is erecting a mixed-use complex of high rises after securing a 70-year BOT lease for a 6.5-ha site in December 2012. HAGL’s project includes a 27-storey office and retail tower with 158,000 sq metres of total space, and a second office tower with 68,000 sq metres. The complex will also include a hotel and serviced apartments. The project is set to be completed in 2016.

Meanwhile, Landmark Developments is a mixed-used project on a 4-ha site financed by Yoma Strategic Holdings, the Singapore-listed affiliate of Serge Pun & Associates. The group owns First Myanmar Investment (FMI), developer of the FMI Centre, which neighbours the site. This project includes a total of 65,000 sq metres of office space in two towers, two hotels, a condominium, serviced apartments and a mall. Yoma raised $82.5m in November 2012 to finance the project, but the firm is still negotiating an extension of its existing BOT lease on the site. Currently, there are 15 years remaining on the lease, but the firm hopes to raise this to 70 years.

In another major development, the Dagon City 1 project, which includes a five-star hotel, office and retail space and residential buildings, is expected to be fully completed by 2020. The project is being developed on land leased from the government under the BOT system, and is developed by Marga Landmark, an international syndicate of Hong Kong, Korean and British investors, and local firm Thu Kha Yadanar. This project is located near the iconic Shwedagon Pagoda where the Yangon City Development Committee’s (YCDC) zoning plan sets height limits for many of Yangon’s buildings to avoid blocking views of pagoda. It is unclear how the developers will overcome the zoning restrictions.

Another foreign developer, Singapore’s Uni Global Power, is undertaking the Golden City project with its local Myanmar partners to build nine 33-story residential towers, a 200-room hotel and a luxury shopping mall, all planned to be ready between 2016 and 2018. The entire project will include 334,445 sq metres of developed space.

Commercial Centres

Central Yangon has three class-A office towers: the Sakura Tower, the FMI Centre and tower one of the Centrepoint Towers. Rents at these locations are higher than the average in Singapore, causing even larger multinationals to look for alternatives. The latest higher-end office space will be provided by the Union Financial Centre, which will offer a total of 7150 sq metres of office space and 1850 sq metres of retail space.

Next to be completed is Traders Square, a $100m, 20-storey tower with 58,000 sq metres of space set to open in 2015. The developers, led by Hong Kong-based Shangri-La Group, have moved quickly, as the project was planned and allocated land in the mid1990s, when the neighbouring Traders Hotel was built, but halted during the Asian financial crisis of 1997-98. Work on Traders Square began in 2012.

Moving away from downtown Yangon, multiple business centres are beginning to emerge. One such outer centre is the east side of Inya Lake, where the HAGL Myanmar Centre is being developed. Another emerging centre is on the west side of Inya Lake where oil and gas services company Myint & Associates is developing a 17-storey office tower on Pyay Road. One office building is already in use in the area, the low-rise International Business Centre, and a large hotel, the Novotel Max, will be opened in the area in February 2015. A third emerging business centre rings Kandawgyi Lake, north of the city centre, where Shwe Taung completed its Union Business Centre, a low-rise complex with 5300 sq metres of offices in late 2013. In the Golden Valley neighbourhood, the Aye Family Company is constructing a 27-storey, mixed-use tower, Diamond Valley Rises.

Fourth, in the west of the city, Junction Square is also developing to become a new business centre. This is where Shwe Taung is building its Crystal Tower and Crystal Residences, to be completed in 2016/17. Finally, the Mayangon township north of Inya Lake is being targeted by the YCDC as the first of several new commercial and business centres identified in the Yangon 2040 urban expansion plan. Yangon-based Living Square is developing a 27-storey, mixed-use office building and residential tower, the Kabar Aye Executive Residence, which will also include four floors of retail offerings.

Finding A Flat

The influx of international firms and expatriate investors has driven up the demand for apartments and condominiums in Yangon. Serviced apartments are favourites among foreigners, because they cater to expatriate demands and provide amenities such as a pool, gym, sauna, restaurant, covered parking and staffed reception area. Most buildings are full and have waiting lists. The three main concerns for a tenant seeking a unit within a development should be maintenance of the common areas, back-up power and parking, according to Scipio Services. Colliers International’s first half of 2014 report stated that there were 990 notable serviced apartments available as of the end of June 2014, with 47 more expected to be completed in the next 12 months. The rentals for these serviced rooms were between $2300 and $15,000 per month.

For the condominium market in Yangon, Colliers said there were more than 2500 units launched in the first half of 2014 and 1800 completed residential units for the same period. The average pre-sale price for a mid-market condominium was $1900 per sq metre, while the average pre-sale price for a luxury condominium was $4850 per sq metre.

Of the existing residential developments in the pipeline, the largest is HAGL’s $440m mixed-use project on the east side of Inya Lake. The existing Marina Residence and MiCasa serviced apartments are also in this area, while the most-recently-completed project is the Shangri-La Towers, a two-tower, 240-unit serviced apartment complex in the Kandawgyi Lake area that was completed in 2014. Apartments in complexes such as the Pearl, in the Golden Valley, and Shwe Hintha, west of Inya Lake, are rented for rates that approach serviced apartments. The largest high-end condominium project currently under way is the $60m, 34-storey Diamond Inya Palace being built by Mandalay Golden Wings Construction and scheduled for completion in 2017.

Gated Communities

There is also demand for gated communities in Yangon, with various high-end projects, including Pun Hlaing Estate, FMI City and Star City, currently on offer. Given the comfort of these residences, gated communities provide amenities such as gyms, pools, spas, tennis courts, golf courses and restaurants. They also provide safety and security for the residents. For the services provided, the residents are charged a premium for maintenance fees and utility costs. Established in 1995, FMI City is Yangon’s first gated community, developed by Yoma Strategic Holdings across 465 acres. The Pun Hlaing Golf Estate was launched in 2000 and boasts a Gary Player-designed 18-hole golf course.

There is also great demand for villas and walled compounds in Yangon, especially among the expatriate community, foreign organisations and diplomatic missions. Scipio Services reports that lease prices for these properties range from $4000 to more than $25,000 per month, depending on size, furnishing, quality standard, amenities and location. In exceptional cases, however, rental prices have been reported as high as $87,000 per month.

Other Real Estate Destinations

Outside Yangon, urban development in the capital city of Naypyidaw, which was built from scratch starting in 2002, is slowing down. However, government offices are still in the process of relocating from Yangon, driving demand for residential real estate. Hotels are also a major focus of development in Naypyidaw, as well as in the tourist destinations of Mandalay, Bagan, Inle Lake, Ngapali and Ngwe Saung.

Mandalay, although larger than Naypyidaw, has a smaller upper class and a quieter real estate market. However, its economy is being boosted by increasing tourism and a growing number of direct international flights. The most notable projects in the city include the 280-room Novotel Mandalay Mingalar hotel, scheduled to open in 2015, and a 17, 000-sq-metre mall, the Yadanarpon Diamond Centre, built in 2010 by Mandalay Golden Wings.


The real estate market looks set to remain hot for the foreseeable future, especially if the large amount of oil and gas exploration under way yields results, and as other sectors such as banking and insurance open up to foreign investment. Tony Picon, managing director of Colliers International Myanmar, told OBG, “Looking at Myanmar before and after Hillary Clinton’s 2011 visit, you can see clear changes. The country is no longer talked about in hushed tones. A hype was created.”

While concerns have been raised about the government’s delays in implementing reforms and the impending 2015 general election, Myanmar is likely to enjoy a catch-up period of intensive real estate investment. U Kyaw Thu, the owner of the real estate firm Estate Yangon, told OBG that the prices should stabilise in the next three years, given the number of ongoing projects, though demand will continue to grow as a new middle-class emerges.

“The government must enforce its laws and implement its policies. It should take back leased lands that are not developed. It should also establish new township in Yangon,” U Kyaw Thu, told OBG. Miller echoed this sentiment, telling OBG that he also believed prices will normalise by 2017 or 2018, adding that the delay in the implementation of the Condominium Law and the uncertainties caused by the election in 2015 were affecting the real estate market. “Things will hold up at least until the general election. If things go well after that, more companies will come in and it will be a supply market,” Miller said.

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