The Nation-Mar 26
Though Myanmar’s real estate sector last year faced many challenges, the government is planning to meet the housing needs of low-income people by working with development partners and private companies, according to speakers at the Myanmar Infrastructure Summit 2018 held March 20 to 22.
Win Naing, deputy director at the Department of Urban and Housing Development (DUHD), said in address on the second day of the event that housing needs would follow the population growth over the next two decades.
He estimated that an additional 4.8 million units would be needed for an estimated population of over 70 million people in Myanmar by 2040, over 22 per cent or 1.07 million units would be Yangon residents.
To fulfill the housing needs of Myanmar citizens, the DUHD has calculated supply projections for future demand and is planning to produce 20 per cent of the targeted units. Among them, 90 per cent of the housing units built by the DUHD will go to low income people while the remaining 10 per cent will be for middle income people.
The remaining 80 per cent of projected needs for affordable new housing will be met by private companies, he said, creating a huge opportunity for local and foreign investors. Myanmar has allowed private sector participation in the construction industry since 1990.
“Here in Myanmar, due to poor infrastructure and municipal services, most of the housing projects have to invest a lot. Housing is a long-term investment, takes a long time to develop, and is cyclical by nature,” he said.
The official stressed the importance of location when developing affordable housing projects.
“The value of a house largely depends on its location. Low income families prefer to live closer to places of employment, education and services,” he said.
Win Naing said the Union government has provided a revolving fund of 100 million kyat (Bt2.34 million) for housing development. Other sources of funding include 15 billion yen (Bt4.47 billion) of Japan’s official development assistance loan and a US$4 million (Bt124.69 million) grant for low-income focused community basic infrastructure development from the Asian Development Bank.
Myanmar’s Construction and Housing Development Bank was established in 2014 as a semi-government bank to provide housing finance mechanisms, including housing mortgage for the people and construction loans for developers. It has offered a “Saving to Home Ownership” product, which allows low income people to purchase a 1-million-kyat family unit on a 10-year instalment plan after they have saved at least 20 per cent of the home price at the bank.
“Midterm growth forecasts remain positive because the government has been active in the implementation of affordable housing projects in recent years,” said Win Naing.
“A surge in new infrastructure projects and upgrading of urban and national transport networks will drive the real estate sector growth here.”
The official said the construction industry would become a major driver of Myanmar’s growth over the next few years, thanks to four new megaprojects to be implemented using public-private partnership (PPP) schemes.
They are the New Mandalay resort city project on MandalayPyin Oo Lwin Road, eco “green city” and KoreaMyanmar industrial complex projects on YangonMandalay highway, and the Smart District project that includes Ayeyarwun and Yadanar highrise housing in Yangon.
Investment opportunities
Many more investment opportunities are waiting for developers as the government develops the PPP model. They include projects in land development, infrastructure development, high-rise apartments and mixed-used development, said Win Naing.
He believes the Myanmar Condominium Law enacted in 2016 will attract foreign companies to develop housing projects in the country, as it allows foreigners to own property for the first time in history. Under the law, foreigners can purchase residential apartments, and foreign investors are permitted to be engaged in condominium projects as co-developers. Less than 40 per cent of the total rooms in a condominium project are allowed to be sold to foreigners.
Ye Linn, a member of Myanmar Construction Entrepreneurs Association’s executive commitฌtee, said his group would implement a $200-million three-year project this year in an aim to supply 20,000 housing units by 2020.
He considered an unclear regulatory environment, land acquisition, tax relaxation, and labour issues to be major challenges for construction companies in Myanmar, along with a lack of technology, experience, infrastructure and access to finance.
Ye Linn said good financial planning, a clear plan, a good funding model and land consolidation are critical to successful implementation of housing projects. He urged creation of a favourable environment for investors coupled with drawing up a masterplan for affordable housing implementation.
“While project funding traditionally comes from the government’s budget, it is important to explore private funding that could be secured through PPP projects,” he said.
Robert Marshall, global director of planฌning and landscape and principal at B+H Architects, said master planning was the key to solving infrastructure problems at every scale – regional, city, community, neighbourhood and onsite.
