Myanmar Real Estate:

How to identify bankable projects?

Presented by Tan Poh Teck, Executive Director
Agenda
Most Frequently Asked Questions
Key Criteria to consider when seeking bankable projects
Conclusion
Where are the bankable opportunities
Brief Overview of Myanmar Property Market

Myanmars neighbors comprise almost 40% of
the Worlds Population Source: World Population clock

Kyaukpyu SEZ
Dawei SEZ
MMID Myotha Industrial
Park & Semeikhon River Port
Major Industrial Zones:
Thilawa SEZ



Yangon & Mandalay
are located at the
crossroads of major
routes of the Asian
Highway Network





ASIAN HIGHWAY NETWORK
142, 000km (88, 235mi )| 32 countri es
Source: UN ESCAP
YANGON & MANDALAY : NATURAL REGIONAL HUB FOR
TRADING & LOGISTIC
AH2
AH3
AH14
AH1
AH1(2)
AH1




Road
River way
Railway
Airport
Lashio
Myitkina
Bhamo
Monywa
Myingyan
NAY PYI TAW
YANGON
Prome
MANDALAY
Kyaukpyu
Muse
Magwe
Meikila
Tamu
KaLay

Yangon: main sea port &
point of entry
Mandalay: Asian
Highway Hub (AH1,2,14)
Trans Asian Railway Hub
Riverway
Kyaukpyu, Deep Sea port
+China gas pipeline +
railway
International Airports

REGIONAL TRANSPORTATION ANALYSIS
Service Catchments
International
Connect China and Kyaukpyu, Yangon, further sea
way to ASEAN, EU, Middle East and Africa.
Trans Asian Economic Corridors: GMS Northern
Economic Corridor & Asian Highway East-West
Economic Corridor :
a) IndiaMandalay-China: Connect the new important
economy markets of China and India
b) Fast growing border trade
Myanmar-China : $4,7 billion - (2010-2011)
Myanmar-India : $1.8 billion (2011-2012)
Domestic
Yangon and cities along Ayeyarwaddy River and
national highway
Local
Mandalay Division
Surrounding areas: Sagaing, Myingyan, Monywa, etc.
Myanmar Real Estate:
How to identify bankable projects?
A project is considered bankable if lenders are willing
to finance it

Textbook definition:
bankable (adj) : Guaranteed to bring a profit

Profit/Financial returns
projects that attract the necessary funds
are bankable
Key Criteria to consider:

Location

Suitable Local (development)
partner

Supply & Demand - Development
scheme

Realistic land value

Development Financing

Construction procurement &
project management



Key Criteria 1:
Location analysis

Myanmar is a large country
be familiar with key regions and states,
major urban centres, townships, major roads and
traditional and new commercial areas
road accessibility
availability of infrastructure network


Very important to study the terrain;
Walk the streets - be thoroughly familiar with the
locations



Key Criteria 2:
Identifying Local Partners

no shortage of potential local partners
varying financial strengths
assess background and credibility of local
partners need time and local market intelligence
no 100% meeting of the minds

*Important to spend time to understand local
business culture, partners motives & objectives




Key Criteria 3:
Development Scheme:

Current lack of clear planning parameters (zoning,
plot ratio/density control)
Over ambitious development schemes (plot ratios
above 10)
Existing infrastructure unable to cope
Owners too keen to impress with iconic projects
which may not be viable

*Be realistic with development proposal

Key Criteria 4:
Land Value

Market opaque
No reliable/credible market data source
Hearsay evidence
Unrealistic expectations by owners
Lack of planning guidelines




*Be prepared to walk away if land values are not realistic


Key Criteria 5:
Development Financing

small local banks, low capitalisation
local banking regulations still at infancy
high domestic financing cost
limited financing options
highly cash driven economy


*Strong cash flow management vital



Key Criteria 6:
Construction procurement &
project management

no lack of professional architects and engineers
workers relatively unskilled
insufficient local construction materials, imports
necessary
Beware of natural geological fault line, earthquake
prone in some areas
relatively high construction cost in major cities (similar
to Kuala Lumpur, Bangkok)

*need to keep tight control on cost and project
timeline

Most Frequently asked questions :
Why are the land and property prices in Yangon & Mandalay so
expensive? What are the factors that led to prices escalating to such
high levels?

Will it be a real estate bubble? Will the bubble burst and prices will
drop in the near future?

Are foreigners allow to invest in land & property? Is there a formal
Strata Title Law or Condominium law in Myanmar?

Is it safe to invest using Proxy or Trust arrangements?

What is the process & procedure for property transactions? Is the
same as in Singapore?

Where should I be looking and which sector to invest in? Where are
the prime & good locations and which area is suitable for investment
or for setting up office?
1. Only Myanmar citizens can purchase land & property.

2. Most of the land owned by the government and only leased to the citizens.

3. Typically, the government will lease the land to Myanmar citizens on a
build-operate-transfer (BOT) or a renewable lease.

4. Previously, most Myanmar citizens put their money in gold, jade, precious
stones & cars.

5. With the country opening up and with an arcade banking system and the
absence of a stock market, most Myanmar citizens when they have cash they
will invested in land, seen as the most secure investment.

6. As almost all land have been bought with cash, no gearing or loan from
banks, etc., no worries about interest rates and loan repayments, hence no
pressure to sell, prices remained high.
Why are the land and property prices in Yangon & Mandalay so expensive?
What are the factors that led to prices escalating to such high levels.
Are foreigners allow to invest in land & property? Is there
a formal Strata Title Law or Condominium law in
Myanmar?

Foreign ownership scheduled in the Condominium Law:

Foreigners will be able to buy up to 40 percent of apartments on
the sixth floor and above in condominium buildings.
Draft law specifies that condominiums must be constructed on land
which is zoned for residential use and is not smaller than one acre.
Smaller plots require approval from the Ministry of Construction
before commencing work.
The law outlines the formation of Building Management
Committees to monitor the management and maintenance of
condominiums.
Property market experts expect the law to help stabilize
skyrocketing rental and sales prices of condominium units.

Property transaction settlement are all negotiated and
completion normally do not exceed 2 months.

1. When buying existing property, buyer will usually pay between 5%
& 10% deposit upon agreeing the price, up to 50% of the agreed
amount within 2 weeks; and remaining 50% within two months to
hand over the keys and close the deal.
2. When buying new property at launch (off plan), buyer has to pay a
booking fee (fixed amount or up to 5% of the value), pay another
5% within 10 days, another 10% one month later, next 60% is
spread over 24 months (equal instalments), final 20% upon getting
the keys.
3. Rental payment are usually one year rental in advance plus up to 2
months deposit, a total of 14 months. Lease tenure is usually one
year with option to renew. Some landlord will be prepared to accept
quarterly advance payment subject to negotiation.




What is the process & procedure for property
transactions? Is the same as in Singapore?
1. Residential.

2. Commercial Office space.

3. Hospitality Hotels & Service Residences.

4. Retail.

5. Industrial.
Where should I be looking and which sector to invest in? Where are the
prime & good locations and which area is suitable for investment or for
setting up office?
Residential Properties:
1. Landed bungalows & villas: These are detached, semi-detached, or terraced
landed properties which are stand-alone, family residences, with a perimeter
fencing/wall & gate. Favoured by expatriates with family for security and the
luxury of a garden. Some foreign companies and diplomatic missions are known
to lease these for use as offices vs the expensive office space within CBD. Rental
starts at between USD3,000 & 4,000 and can cost up to USD25,000 per month
depending on location, size and quality of furnishing & amenities.

2. Apartments & Condominium: Majority of residential spaces within Yangon are
Condominiums, which are residential units inside a building with at least one
elevator; Apartments usually what we call walk-up without an elevator. Condo
units command rental of USD2,000 to USD7,000 USD per month for spaces
ranging in size from approx 400sf 2,000 sf.

3. Gated Developments: These are usually located along the periphery of the city,
including Pun Hlaing Estate and FMI City to the west over the Bayint Naung
Bridge, and Star City to the southeast over the Yangon-Thanylin Bridge. These are
high-end & luxury residences with amenities, eg., gym, spa, pool, tennis courts,
golf course , F&B outlets & 24 hours security. Average rental starts @ USD2.50
psf per month.

Commercial Office Space:


1. Demand for office space has risen significantly since 2012. Some hotels and
residential units have been converted to office space due to lack of supply of office
space. As consequence, rents have been rapidly risen in the last year. Another 50%
has been added in 2012.

2. Offices Rental ranges from USD20 - USD45 psm/month in early 2013 rose to USD50
USD75 psm/month with CBD area office rental hit USD90 psm/month and beyond in
mid 2013.

3. Service Office/Business Centres became popular even though the rental is higher
due to shorter term leases being offered.

4. Good quality, sole-purposed, well located offices equivalent to Grade A commercial
office space attract MNCs tenants and also command the highest rents. Currently
relatively scarce, eg., Sakura Tower & Centre Point Tower.

5. Most office space available are within a mixed-use building or a sole-purposed
building of smaller size containing fewer facilities, less than ideal location, lacking in
amenities, parking and building maintenance.

Hospitality Hotels & Service Residences:


1. Serviced Residences which are well maintained and managed are highly sort after
running at 100% occupancy, with waiting lists. Amenities typically include a pool, gym,
sauna, a restaurant, covered parking, and staffed reception area. Currently only few of
such quality are available, eg., Marina Residence, Micasa Residence, & Sakura
Residence. Rental for 2BR apartment was betw USD2,500 3,500 per month in 2012
will now cost USD5,000 -6,000 per month and beyond.

2. Substantial increase in both tourist & business visitors in the past 12 to 18 months
have resulted in the jump in occupancy rates in Yangons hotels from an average of
below 40% to betw 90% & 100%. Room rates more than doubled from below USD90
to more than USD200 per room night. Peak period rate can be more than USD300 per
room night.

3. Hotels which formerly rented rooms as offices started opting to offer those rooms
for nightly rentals again as leases came due for renewal.

4. International Hotel Chains with present in Yangon includes, Shangri-la Group
(Shangri-la Residences & Traders), Pan Pacific (Park Royal), Orient Express Hotel
(Governor Residence), General Hotel Management (Strand Hotel), & Sedona. Accor
Groups Novotel, Pan Pacific and Hilton Hotel are under construction.
There are currently more than 50 shopping centers, malls, and
hypermarts in Yangon. Junction Square, along Pyay Road near Hledan
Junction being the premier shopping complex in Yangon.

Parksons Departmental store recently open in FMI Centre in Yangon
CBD.

Marketplace by City Mart, a unique stand alone mall with City Mart
Supermarket as anchor and a few shops & F&B outlets is becoming the
new trend.

There are a few other shopping mall with at least one large scale mix-
use development planned or under construction which will compete with
Junction Square.
RETAIL SECTOR
1. No1: South Dagon Industrial Zone
2. No2: South Dagon Industrial Zone
3. No3: South Dagon Industrial Zone
4. Dagon Seikkan
5. Dagon Myo Thit (East) Zone
6. North Okkalapa
7. Shwepoukkan
8. South Okkalapa
9. Thaketa
10. West Yangon Industrial Zone
11. South Yangon Industrial Zone
12. Hlaing Thar Yar
13. Shwe Pyi Thar
14. Mingalardone
Industrial Zones in Yangon
IINDUSTRIAL ZONES IN YANGON
11 miles
Sagaing
38miles
Mandalay
36miles
Myingyan
Airport
22miles
28miles
Monywa
Myotha Industrial Park
Semeikhon Port
MMID PROJECT LOCATION MAP
MIP + SEMEIKHON PORT
MYOTHA INDUSTRIAL PARK
SEMEIKHON RIVER PORT INITIAL PLAN
Prominent Areas of Yangon:
Yangon consist of more than 30 townships with two strategic lakes, Inya
Lake & Kandawgyi Lake. The key township and prominent areas are:

Prime locations:

1. Pyay Road;

2. Areas around Inya Lake

3. Kamaryut Township - Heldan Junction Area;

4. Bahan Township - Golden Valley;

5. Areas around Kandawgyi Lake;

6. Yangon Downtown (CBD);


Pyay Road is one of the longest roads, most prominent
and well-maintained road in Yangon.

Pyay Road runs along the west of Inya Lake and
heads north to the airport. Most guests arriving by
way of Yangons airport will travel south along this
road into Yangon CBD.
Most oil & gas sector companies are located in this
area. Traffic less congested and ease staff traveling
time from work to home in outlying gated
communities.
International Business Centre, American Embassy
Residence, Shwe Hin Thar condo are located along
this road.
Available spaces are limited. Asking prices are high
due to prominent location.
Several developments are under construction and
due to be completed in 2014 & 2015.
Prime Location: Pyay Road
Kabar Aye Pagoda Road runs north to south along
the east of Inya Lake.
Service residences & hotels are located here, eg.,
Marina Residence, MiCasa Residence, Sedona
Hotel, Inya Lake Hotel, etc..
Second most prominent road to Pyay Road,
running from the airport south to downtown
Yangon CBD.
Available space is limited. There are several
projects currently planned for this area. Most
prominent is the large scale development opposite
Sedona Hotel led by the Vietnamese company
Hoang Anh Gia Lai scheduled for completion in
2015.
Prime location with lake views and close proximity
to the areas with many hotels and F&B outlets.
Prime Location: Kabar Aye Pagoda Road Road

Hledan Junction in Kamaryut Township is situated
just south of Inya Lake on Pyay Road.
Several new developments, eg., soon to open
Novotel and Yangons premier shopping center,
Junction Square are located here.
A newly constructed fly-over which opened in April
2013 has helped eased the very bad north-south
traffic congestion that affected this area.
Buildings in this area are mostly commercial space
fronting on Pyay Road and mainly mid-to-high end
residential properties situated at the rear.
Hledan Junction area is mostly sort after by
organizations/businesses seeking to benefit from
high transient foot traffic and where proximity to
Yangon CBD is not a priority.


Prime Location: Kamaryut Township
Heldan Junction Area;
Golden Valley, Inya Road, & University Avenue in
Bahan Township form the most prominent
residential areas in Yangon.
Situated between Inya Lake & Kandawgyi Lake, this
area is where the American Embassy, the Yangon
Yachting & Sailing Club, Yangon University as well
as walled residences of diplomats, expats and
wealthy individuals.
Many large NGOs and several MNCs have their
offices in large walled houses in this area.
This area is considered to be Yangons top end
residential location which commands high rental.
Strong competition between converting large
houses to offices and retaining its luxurious homes
status together with limited supply have push up
asking prices in this area.


Prime Location: Bahan Township Golden Valley
Kandawgyi Lake is strategic lake near downtown
located just north of Yangon CBD.
This area helps provide some relief from the traffic
congestion and parking problems that exist in
Yangon CBD.
Three prominent hotels, Chatrium Hotel, K
Paradise Hotel, and Kandawgyi Palace Hotel are
located in this area.
Kandawgyi Lake is conveniently located between
Yangon CBD and the prominent residential areas of
Golden Valley and Inya Road.
Currently only few commercials spaces are
available. Union Business Centre, a nicely
renovated office complex converted from a large
residence was completed in August 2013.
Shangri-la Towers are expected to complete in
2014. Rose Garden Hotel, a recently completed 4
stars hotel is also located in this area.
Prime Location: Area around Kandawgyi Lake
Prime offices like Centre Point Towers, and Sakura
Tower as well as the prominent business hotels
Traders and Park Royal are situated in this location.
Hilton Hotel is reportedly to be opening in the near
future and will be located in the south Centre Point
Tower.
This area boasts many heritage buildings. Several
of these buildings are undergoing restoration and
will be developed as residences and office space.
Yangon CBD is one of the most congested area in
Yangon. Journey through the CBD that used to take
20 minutes may now take more than an hour.
Rental prices for commercial space in Yangon CBD
are the highest in Greater Yangon.
There are few less expensive alternatives to the
prominent business towers in this area.
Inadequate parking is an issue in this location with
some buildings offer limited paid parking
Prime Location: Yangon Downtown (CBD)
Conclusion:

Condominium Law expected to be ratified by end 2013 or early
2014. Foreign ownership of condo apartments as explained
earlier will be allowed.
A spike in prices for condominium and mixed-use developments
is expected to follow.
Rental prices for residential leases unlikely to drop in the future.
However the rate of increase will likely to ease towards 2014.
Both residential and office rental will start to stablise towards
end of 2014 and 2015 as more new units are completed and
more alternatives are available. Prices will however be propped
up by more foreign companies entering Myanmar.
Investors will seek alternative opportunities outside of Yangon.
Lifting of sanctions by the US will allow more FDI into Myanmar
as well as allow investments outside of Myanmar.
Overall outlook going forward remains positive as economic
and political reform continues to make progress.


Disclaimer: Information, views , opinion and values shared in this presentation were compiled and presented in good faith and are intended for info and comparative purposes only. Suntec Real
Estate Consultants Pte Ltd cannot be held liable for the accuracy of information provided nor can it be held liable for the accuracy of the information as presented. The statements and conclusions
made are the opinions of Suntec Real Estate Consultants Pte Ltd and/or its representatives, and are based upon the facts or opinions as presented. Statements and conclusions presented are not
intended to cause harm to individuals or companies. All facts, figures, and conclusions should be independently confirmed and audited before their use to make strategic business decisions.
THANK YOU
For enquiries please contact:
Tan Poh Teck, BSc., MRICS, Executive Director, Investments & Business Development
Email: tan.pt@suntecrealestate.com; Tel: +65 96213097