Despite a continually growing population, there has been very little housing development in Myanmar (formerly Burma) through the past 50 or so years of largely isolationist dictatorial military rule. This lack of development is especially felt in Myanmar’s largest city, Yangon, which has a population of about four million people. Yangon is the center of a real estate boom that has been developing in Myanmar for the past few years since a change in government and the lifting of economic sanctions. Property prices in and surrounding Yangon have risen rapidly and stayed high, but because of the minimal development in the recent past, supply is low, and a high-demand market has many foreign investors willing to pay higher prices in hopes of profiting as new development continues to raise the value of property.
Foreign investment is not the sole factor in soaring real estate prices, which are partly due to jade miners, who have had a tendency to invest in real estate rather than place their money into banks. This tendency has driven prices up so that even before sanctions were lifted, property in Myanmar was sometimes much more expensive than comparable property in neighboring countries. From one perspective, higher prices for property, especially factory land, could potentially be seen as a deterrent to foreign investment. From another viewpoint, sustained rising prices coupled with the lifting of trade sanctions by Western governments in 2012 is alluring to foreign investors who want to be “first movers” in a rapidly expanding real estate market. However, with land prices as high as several thousand dollars per square meter (11 square feet), some long-term development projects have begun to seem unlikely.
Some have called the real estate boom an invasion of luxury hotels, which makes sense in a regional context, as the hotel industry has been booming in many Southeast Asian nations over the recent years. To some developers, Myanmar’s real estate market seems especially ripe for the plucking, as changing border and trade policies have created a surge in demand for high-end residences. According to a Wall Street Journal article citing Colliers International, “Yangon has only about 1,850 high-end hotel rooms…and 740 serviced apartments, even as the country is on track to attract around a million visitors this year. There are only about 680,000 square feet of office space – less than some single office towers in New York.”
These numbers make it clear that anyone who can afford to develop property in this city stands to profit enormously. However, with an annual per capita income of about $900, many citizens in Myanmar are not wealthy enough to gain entry into and therefore benefit from the nation’s real estate boom, and as residential property prices continue to soar, many of the nation’s more impoverished citizens will likely have trouble finding housing. Some believe this will inevitably contribute to an already vast economic inequality. The less wealthy citizens of the nation have little protection in Myanmar, which in 2012 ranked 180th out of 182 countries surveyed in the Corruption Perceptions Index, an index that compiles data about perceived governmental corruption, defined as “the misuse of public power for private benefits.” The government of Myanmar is faced with many challenges when it comes to figuring out how to control for property price inflation and to profit from a booming real estate market constructed largely with foreign money.
Since property prices in Myanmar are so high compared to neighboring countries, there has been much speculation that prices will eventually have to fall again, which may provide some problems for long-term investors, who may balk at the thought of losing profit when prices go down. Real estate agents based in Myanmar have stated that there have been many instances of gambling, in which a person will buy a property for a certain price in the morning, and will sell again later that day for a slightly higher prices. This leads to some questions about the sustainability of growth and value in the country’s real estate market, though such questions have not deterred investors, who see opportunity for profit in this country in desperate need of property development, which is positioned for extensive economic growth in the coming years.