MYANMAR has taken steps to reduce an oversupply of high-end residential property units by relaxing rules on foreign investment, according to a recent report by real estate services firm Jones Lang Lasalle (JLL).
JLL explained that with the liberalization of the economy and transfer of political power from the military to civilian control, the focus of developers has been on lucrative luxury units over the past few years, encouraged in large part by Myanmar’s rapid economic growth after the lifting of global sanctions.
The economy is expected to grow at a rapid 8.4-percent pace this year.
The real estate monitor noted, however, that 25.6 percent of Myanmar’s population lives below the poverty line, and the developments in residential real estate have predictably led to an overstock at the top end of the market, with a shortage of low-cost and mid-range residential accommodations.
According to Colliers International, there were at least 6,650 vacant high-end residential units across Myanmar at the beginning of 2016, most concentrated in and around the country’s largest city Yangon.
Legislation implemented at the beginning of this year eased rules on foreign investment by allowing foreigners to purchase real estate. Under the new Condominium Law, foreigners may now own up to 40 percent of an entire building.
JLL noted, however, that while there has been some buying from foreign investors, the liberalization has not yet had much of an effect on reducing the oversupply.
Nevertheless, JLL predicted that the drop in real estate prices and rental returns seen in Myanmar in 2015 would stabilize and begin to show improvement through the second half of this year, attributed primarily to political stability brought about by the new National League for Democracy (NLD) government, strong GDP growth, and anticipated further financial and regulatory reforms.