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Issue 112 February 2014
S$10, RM25, IDR80,000, THB250, HK$60, PHP350
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Design legend
Jean-Michel Gathy
on his latest resort
in Switzerland
"# " $%&'()'* #+,-
SPECIAL REPORT

Myanmar in
motion
BY ROBERT CARRY
While waiting to see if a new Condominium Law opens up
Myanmar real estate to the world, major developers drive
Yangons residential market forward.
!"#$%&$' )*+, " -.
SHWEDAGON PAGODA
IN YANGON
"# " $%&'()'* +,-#
SPECIAL REPORT

I
n 2008, Yangon was a city in pieces. Myanmar
was still reeling from the militarys ruthless
suppression of the monk-led pro-democracy
protests a year earlier when Cyclone Nargis
swept across the country, killing 140,000 people.
International aid agencies stood ready to help
but the junta refused to let them into the country.
It looked like the military government, paranoid
about outside interference, cared more about
maintaining its position than it did about the lives
of its people.
While tonnes of aid stood waiting in Bangkok,
Yangon city was in near-total darkness. Uprooted
trees littered the streets and hundreds huddled in
temporary shacks next to the traffc-free roads. The
future looked bleak.
Five years later and Myanmar is a country
opening up to the world. The civilian government
many expected to be a stooge of the military that
handed it power has been introducing a string
of reforms. With the West dropping sanctions
and ramping up trade in response, Myanmar is
booming. GDP grew by 5.5 percent to year-end
2012 and 2013s numbers are expected to be
equally bright.
With foreign companies practically queuing at
the border, property prices-residential, offce,
industrial and commercialare all on the up, and
Colliers and Savills, two international real estate
services frms, both opened offces in Yangon in
2013 to serve the market. Top-quality offce space
in prime locations in Yangon, the commercial
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capital of what is still the poorest country in
Southeast Asia, is in particularly short supply. At
USD78 per sqm per month, rent prices easily top
Manhattan (USD49.95).
One reason for this type of growth, particularly
with international grade apartments and units, is
that Myanmar was essentially starting from zero.
Theres little supply and a lot of competition for
what is in place.
Unlike countries such as Ireland, where real
estate prices ballooned before crashing down,
speculators in Myanmar are buying with real
wealth rather than credit. With no stock market in
the country, property is one of the only available
cash dumps aside from US dollars and gold.
Without the worry of banks coming looking for
repayments, those buying in Myanmar can afford
to wait for a return. The fact that the market is
supported by this type of owner makes it far less
likely to crash.
'Rent has gone up three- or in some cases four-
fold since we arrived here 18 months ago, says
Brett Miller, managing director of Scipio Services,
which provides real estate advisory, facilities
services and property management services in the
country.
Unfortunately, at present, foreigners cant buy
any type of property in Myanmar. However,
would-be investors have other routes in. A handful
of foreign companies tied in with local frms
operate in Myanmar`s real estate market, one of
which is Yoma Strategic. This group is responsible
for Thanylin Star City the biggest mixed-use
project under construction in Yangon.
Sited on 135 acres in southeast Yangon, this
ambitious project will ultimately have some 9,000
residential units and 157,935 sqm of commercial
and retail facilities. It will also feature a riverside
promenade, ferry terminal and sporting facilities.
Eight miles west of Yangon, meanwhile, is the
Pun Hlaing Golf Estate - the group`s fagship
residential project. The luxury development frst
opened in 2001 with the latest phase currently
under development. Seen as the countrys most
prestigious residential address, the site is set on
650 acres of landscaped grounds.
The development, which is home to three
ambassadors and many of the citys diplomats,
features an international hospital, international
school, country club, swiming pool, spa, restaurant
and gym all built around a Gary Player-designed
golf course. Its range of residential units is made
up of villas, townhouses and condominiums for up
to 800 families.
What we did [with Pun Hlaing Golf Estate]
was radically different from what everyone else in
Yangon was doing, says Cyrus Pun the groups
executive director and co-head of real estate. Its
nothing newyou see it in premium developments
all over the world-but it was a frst for the city.
'Many of our developments in Myanmar are
joint ventures between FMI and Yoma Strategic,
explains Pun. 'FMI is a local company that retains
all our land holdingand it has the development
rights to that land. What Yoma [which is listed on
the Singapore stock market] brings to the table is
foreign capital.
In other words, Yoma Strategic is a company
listed outside Myanmar but with a strong tie-
in with a company-FMI-operating in the
burgeoning Myanmar real estate market. Both
frms are held by the same majority shareholder,
which means foreign investors can tap into the
"# " $%&'()'* +,-.
SPECIAL REPORT

!"#$%&$' )*+, " -.


profts being generated by taking up shares in a
company like Yoma Strategic (YOMA:SP). As of
last month, Yoma stock was trading at more than
80 times future earnings, and has doubled since the
same period last year.
Interestingly, a new Condominium Law is
currently in the fnal stages of being debated
in Myanmar`s parliament. It`s expected to give
foreigners the right to own condominium units in
line with laws in place in Thailand or Cambodia.
Thats going to shake up the industry, adds
Miller. 'It`s going to be a frenzy of developers.
Its a view echoed by Pun: The foreigners
coming in are mainly in the top end of the market.
Theyre interested in new, modern, quality
apartments. There will be push in the upper tier of
the market when foreigners are allowed to buy.
The potential growth that the new Condominium
Law could trigger wont stop there: The main
thing about the Condominium Laws is not about
foreign ownership, explains Pun. 'Right now,
strictly speaking theres no title granted when you
buy or own an apartment. That means apartments
cant be used as collateral when looking for a loan.
The Condominium Law is going to clearly defne
strata titles which will, in turn, enable many of
these apartment buyers to use the property to get
loans. That is going to free up a massive amount
of capitaland it will be a major boost for the
market.
Myanmar`s real estate market is riding the
crest of an ever-growing wave and companies
like Yoma Strategic offer investors an early-in.
For those looking for a more direct line into the
market here, the condominium laws will provide
the mechanisms needed for foreigners to own units
directly. And with the spiral in local demand set to
be triggered once apartment ownership laws are
cleared up, investors who get in early may well see
signifcant returns.
THE MASTERPLAN FOR
THANYLIN STAR CITY