Yangon’s soaring condo prices are unlikely to abate at least until 2015 as the supply is too scanty to meet the demand, real estate agencies and market experts said.
“You can add up the number of condos that are in the pipeline for the market. Up to 2015, there are going to be about 20 new condos with 200 to 300 units each, which give you only 6,000 apartments. The number might even be less as some condos have only 100 or so apartments. Even if the market can supply 10,000-20,000 condos it will not take care of the shortage,” U Than Naing, managing director of real estate firm Shwe Zabudeik, told Myanmar Business Today.
“I don’t see the condo market coming down any soon. Regular flats, which are not really condos, might see some respite in terms of prices,” he added.
Also, in terms of hotel rooms Yangon is braced for insufficient supply until 2015, which will also hike condo prices, real estate market sources say.
Daw Moh Moh Aung, secretary of Real Estate Service Association, said: “Many international hotels in Yangon used to offer their rooms for rent in the past. But now they don’t. Some companies have started to rent condos to use them as offices. So, while the sales of condos are high the condo rental market is following the same trend too.”
Currently, a basic condo unit fetches about K60 million ($60,000) and the per square feet price is K200,000 ($200), U Than Oo, vice chairman of Myanmar Real Estate Service Association, said.
“The present condo market is not affordable for the middle-class. The condo market will keep rising until there is some balance between supply and demand,” he said. Foreign entrepreneurs will be able to purchase condos only after the condominium law has been enacted, which is still under discussion at the parliament, U Than Oo added.
“The current buildings under construction are mostly two apartments in one flat, or so called ‘Yin Kwe’. If a six-storey building is constructed it costs about K20,000 ($20) per square feet. If the building is set up on 20,000 square feet of plot you are looking at construction expenditure of about K400 million ($400,000). Constructors are eyeing condo business more and more because of this sheer profits margin.
“In other ASEAN countries, apartments can be bought through bank loans. However, due to high interest rates and ample supply the real estate market in the region has dipped recently. Condo price in Thailand can vary from $500,000 to $4 million, while in Singapore it can fetch up to $16 million. However, those condos come fully furnished and with many services and facilities included,” U Than Oo said.
Yangon is seeing a massive surge in local and foreign businesspeople coming into the commercial hub of the country. Youths from all around Myanmar also are coming in growing numbers either for higher education or to earn extra money.
U Than Oo said: “The demand is only going to go up. I see the prices climbing for both sales and rental at least until 2015.”