A broad definition of real estate covers property, land, buildings, air rights above the land and underground rights below the land and that there are four types of real estate: Residential real estate, Commercial real estate, Industrial real estate, and land.
Residential real estate includes both new construction and resale homes. The most common category is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes, multi-generational and vacation homes. Commercial real estate includes shopping centers and strip malls, medical and educational buildings, hotels and offices. Apartment buildings are often considered commercial, even though they are used for residences. That is because they are owned to produce income.
Industrial real estate includes manufacturing buildings and property, as well as warehouses. The buildings can be used for research, production, storage and distribution of goods. Some buildings that distribute goods are considered commercial real estate. The classification is important because the zoning, construction and sales are handled differently. And land includes vacant land, working farms and ranches. The subcategories within vacant land include undeveloped, early development or reuse, subdivision and site assembly.
According to the Founder and Director of Shwe Property Real Estate, Kaung Thu Win, there is no reasonable situation as to why the policies and the real estate markets remained unchanged in Myanmar in 2019, though a lot of changes took place in 2017 and 2018, especially in 2018. Recently, the issue of home loans became a major trend in real estate sector as a few local banks such as Ayeyarwaddy, Kan Baw Za and Yoma started providing new products like home loans to the buyers and that makes it easier for many qualified buyers possible to purchase houses or apartments in the market.
According to the Colliers Myanmar Office Q1 2019, the citywide average rental rate has corrected downwards at $38 per square meter per month, a decline of 1.5% and 6% on a quarterly and annual bases respectively.
To purchase a property with home loans, the project must be finished at least 70% or 80% and only the projects that meet this criteria are eligible for home loans. The last few years saw the introduction of laws, which relate to the policy for real estate markets, specifically to acknowledge the needs of developers and buyers. For example, Condominium Law was passed just before the change of government and the by-laws have been published which makes it possible for a foreigner to purchase a condominium in Myanmar. This is one of the examples of improvement in laws and regulations which affect the overall sector.
Not only that, there are improvements concerning the laws for apartment buildings and the last two years saw resurrection of residence building projects across Yangon. Back in 2017, separate from the condominium law, the apartment law was strengthened to protect the ownership of the buyers and also for mortgaging purposes. Moreover, the laws concerning real estate services, the laws to protect the service providers were also strengthened. This is a result of real estate related associations and bodies giving a push on the laws relating to their sector.
More than five or six years ago, many businesses had to pay premium prices for office space such as the one in Sakura Tower because there were few office space that met international standards. In 2019, as the number of projects, buildings, and apartments has risen up, buyers or investors can select any type of property they prefer and that improves supply of properties for commercial rent markets and businesses. Just as the supplies are abundant in the market, the demand from the buyers or renters may not be catching up. Therefore, for the ones who want to buy or rent a place, this year may be the best time for getting a perfect deal. Market insiders also say that there is a new trend in commercial property renting. Previously, there was more short-term renting but the new trend is toward longer term leasing. Some of the foreign businesses and building developers have made partnerships to sign long-term leasing contracts for up to 10 or 15 years. Also, businesses who rent for at least two years now want to discuss with their landlords about how the market would be in the next three years whether it will be up or down and some have put in conditional factors in the contracts.
According to the Colliers Myanmar Office Q1 2019, the citywide average rental rate has corrected downwards at $38 per square meter per month, a decline of 1.5% and 6% on a quarterly and annual bases respectively. Moreover, in terms of location, downtown rate remains highest at an average of $43 per square meter per month. Colliers stated that they expect the market to experience a more competitive rental environment in the next three years. And they believe that it would create an impetus for potentially large-scale businesses to scale up operations, as well as small and medium sized tenants to relocate in formal office buildings.
Real estate sector has started to become more pro-active as the 2019 Myanmar National Real Estate Awards (MNREA), powered by Shwe Property, was held on May 28 at N0v0tel Max, Yangon and it was the country’s first of the kind with the aim to celebrate annually to reward top property developers and constructions in the local property development industry., The 2019 MNREA promised to help stimulate the property of real estate sector in Myanmar, through a fair and all inclusive platform that will showcase and celebrate the best property development projects in the nation.
Note: Myanmar Insider would like to thank Shwe Property Real Estate and Research for providing information for this article.