Singaporean real estate developer, architectural and engineering consultancy firm Rowsley Ltd and Vietnam’s Hoang Anh Gia Lai (HAGL) have agreed on a proposed deal for a mixed-use development valued at $550 million in Yangon.
Under a Heads of Terms Agreement signed last week, Rowsley will invest $275 million for a 50 percent stake in a company that wholly owns HAGL Myanmar Centre, one of the country’s largest integrated projects with four office blocks, a five-star hotel, a retail mall, serviced apartments and residential apartments, Rowsley said in a stock exchange filing.
HAGL will make further investments and will undertake the construction of the entire project.
However, Rowsley said the detailed terms and conditions for the joint venture “are to be agreed in due course and shall be subject to … due diligence and all requisite regulatory approvals.”
Rowsley and HAGL Land will initially both hold 50 percent stakes in the joint venture, with Rowsley having the option to increase its interest in the joint venture in the future.
The group intends to fund the investment through a mix of debt, equity and bank borrowings.
Rowsley Chief Executive Officer Lock Wai Han said: “Myanmar has seen rapid developments in the last few years …. Yangon currently faces a severe shortage of top grade office space, hotels and modern malls. The first phase of HAGL Myanmar Centre will be operational in 2015 and will immediately address the acute shortage of real estate in all these asset classes.”
After the US lifted the bulk of its economic sanctions in 2012, Myanmar has enjoyed strong foreign investment growth and improved business confidence. A McKinsey Global Institute report estimated that the country will need total infrastructure and real estate investment of $320 billion between 2010 and 2030.
Spread over more than 73,000 square metres (sqm) in Yankin township and next to Inya Lake in Yangon, HAGL Myanmar Centre has a land lease term of 50 years plus an option for another 20 years.
It will have a total net gross floor area of almost 640,000 sqm when fully completed in 2018, comprising both commercial and residential components.
The first phase of the development includes two office tower blocks with a net area of about 81,000 sqm, a retail mall of about 39,000 sqm and a 400-room five-star hotel, and is expected to be completed by end-2015.
Construction of the first phase started about two years ago and the second phase, comprising another two office blocks with net area of about 94,000 sqm, and more than 1,000 service and residential apartment units, is expected to start in early 2016.