New emerging South-east Asian economies, in countries such as Cambodia, Myanmar and Vietnam, are flourishing and investors have expressed interest in these growing markets as the rest of the world struggles with political and economic stability.
But the demand is now and some confusion in Myanmar’s legal system may be stopping investors from bringing their investment monies into the country. Existing legislation concerning the permissibility of foreign ownership of private condominium units has put an obstacle in developers’ efforts in wooing investors. The uncertainty stems from the lack of clarity in whether the regulations apply to existing apartments and the specifications of a “condominium”. Under current laws, 40 per cent foreign ownership of a development is permitted.
While the Myanmar government scrambles to come up with by-laws, the real estate sector in Myanmar has lost a little of the shine following the bullish market since 2011 when the economy opened up to foreign investors. The residential sector in particular has been quiet over the past year and a half. The Department of Urban and Housing Development has been working hard to come up with the by-laws but they have yet to be sent to the Cabinet for approval.
Photo credit: D3 Capital
In the meantime, mid-tier condominium and luxury property prices have fallen 41 per cent and 22 per cent since 2014. That said, rental yields of 8 to 12 per cent can be expected in the current environment, though much more lies in potential yet untapped. Industry players are hoping the new rulings, when implemented, will open the market up to retail buyers from Thailand, Singapore, Hong Kong and China.