Naim Indah City Development, a wholly-owned subsidiary of Malaysian property developer Naim Indah Corp, has signed a memorandum of understanding with local firm United Pacific Development (UPD) to develop a 32-storey office tower in Yangon.
The firms will incorporate a joint venture company to develop the project, which will be constructed on lands along Pyay road owned by Hla Myint Shwe and Aye Myat Mon, Naim Indah said a stock exchange filing.
The agreement will be valid for three months within which the parties have to enter into definitive agreements regarding the project.
Naim Indah said the proposed initial paid-up capital of the joint venture is as yet to be determined, however, the committed investment amount of the JV will be contributed by the parties in proportion to their respective percentage of shareholding, according to the agreement.
The Malaysian group will hold 51 percent interest in the venture and UPD will hold 49 percent. UPD will contribute its proportion of the committed investment amount through a lease of the project land.
Naim Indah said it aims to manage and complete the development and construction of the project within four years.
At the end of 2014, the total office supply in Yangon stood at 107,000 square metre (sqm), according to property research firm Colliers International. In 2015, new supply is estimated to reach over 60,000sqm, more than twice that of 2014.
While many better-quality office options are now underway, there remains an absence of proper international Grade A buildings in Yangon. According to Colliers, there is barely 38,000 sqm of top-tier office space in Yangon.
The citywide average office rental rate ended at $69.17 per sqm monthly in the last quarter of 2014, a slight increase from 3Q 2014’s $68.75. This translates to roughly $13,750 per sqm monthly for a 200 sqm office unit, one of the highest in Southeast Asia.