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November 21 - 27, 2011
richest countries in Asia in the 1950s and there is a strong appetite within the country to realise its potential once again, he added. Tony Picon, associate director of research at Colliers, said the history of the country during the past 20 years has significantly altered the way investors should think about real estate in Yangon, the nations commercial capital. One example is that the most sought after and expensive units of an apartment or condominium block are on the ground floor, which is totally opposite from other countries and for good reason, he said. In fact, the definition of what differentiates an apartment from a condominium is also unusual. In Myanmar, a condominium has a lift whereas an apartment doesnt because there is no law defining actual strata title, Mr Picon added. The office market is beginning to reach saturation point with total supply limited to about 50,000 square metres (538,000 square feet), less than many individual office buildings in Bangkok. Surachet Kongcheep, senior manger of research at Colliers, said occupancy is at 100 percent in all but one of the buildings. There was no new supply for the whole of the last decade and one new office building opened in 2010, said Mr Kongcheep. Many businesses and NGOs occupy space in residential units and some have taken up space in hotels and serviced apartments, he added. Both the hotel and serviced apartment market are seeing robust demand mostly on the back of a surge in growth from tourists following the release of Daw Aung San Suu Kyi and renewed interest among Myanmar investors. Mr Picon said that some hotels have to turn people away due to increased demand and limited supply. It wasnt long ago when they remained largely empty and converting some rooms to office space was the only means of surviving such difficult times, he said. Mr Picon added that many in the tourism industry are concerned that such limited supply will create bottlenecks in the future for the whole of Myanmar as Yangon is the main entry point and tourists will wish stay for a few days and visit the many sights in the city before travelling elsewhere. The next year will be a critical one for the country as it is expected to pass an investment law that could lead to a pro-development growth model based on export-led manufacturing. That is the only way that sustainable growth for the country can occur as has happened in Vietnam, Cambodia and Laos in the past 10 years or so, said Mr Picon. Gestures of reconciliation between the government and opposition could become more tangible and eventually lead to an ending of sanctions imposed by Western nations. New finance regulations are planned that might bring the official rate of the national currency in line with the market rate and allow smoother operations in what is essentially a cash-based economy. Mr Picon sees the currency, investment law and sanctions as the three pillars keeping the traffic light on amber. Once these three are dealt with the green light will appear but as with any emerging economy the road will be difficult with many obstacles. I think the country will soar and the Yangon Property Report for 2021 will be a very different one from 2011, we hope.

MyanMar tiMes

Myanmar paused at the lights for investors

Recently released Colliers property report points to a bright future for Yangon
MYANMAR is gradually opening up and the new pro-development economic policies being implemented will set the real estate sector on a dramatic new course for growth, says the first Yangon Property Market Report from Colliers International Thailand. You could say that the situation for investors is a bit like amber at a traffic light with everybody ready to go after the sanctions are lifted and a new investment law passed, said Patima Jeerapaet, managing director of Colliers. Mr Patima referred to land prices in prime locations such as along Pyay Road and downtown attaining the same levels as that of the centre of Bangkok in anticipation of an opening up in the near term. However he sounded a note of caution: We have been down this route before in the country; only to have the door closed, so there is some caution within the optimism. Myanmar has slipped to the bottom of the ASEAN economic league table, below Laos and Cambodia, which Mr Patima believed would give added impetus to reform the economy. Myanmar was one of the

Labourers load bags of cement at a wholesale yard in Sawbwargyi Gon in Yangon. Pic: Lwin Maung Maung

Healthy supply pushes construction material prices down: traders

By Noe Noe Aung THE rains have finally stopped and demand for most construction materials is booming, wholesalers said last week. More construction materials are flooding into the market and prices are coming down, even though demand for many items is up, said Daw Mi Mi Tun, a manager of Shwe Myitta construction material wholesale shop in Insein township. She added that prices for cement and iron bars particularly those of 10 millimetres in width are falling. The most popular cement brand, Thailand-sourced Elephant, was selling for K4650 a bag (49 kilograms or 108 pounds) and secondfavourite Diamond also from Thailand was selling for about K4600; reductions of K150 and K100 a bag respectively from midSeptember. Cement prices are a little down because supply is easily meeting demand, Daw Mi Mi Tun said. Prices of South Korean made iron bar, which is called the original in the market, are down too, she added. Prices of 10mm-thick iron bar dropped to K64,000 from K66,000 in the same period, while gravel fell by up to K12,000 a pitch (100 cubic feet) from mid-September. U Aung Myint, the owner of Yadana Aung construction material wholesale shop in Mingalar Taung Nyunt township, said the strength of the kyat against the US dollar and other currencies was helping to make cement imports cheaper. The exchange rate [for dollars] is down and up to five new brands of cement are being imported from Thailand. Gravel prices are also down, he said. Since mid-October, demand had noticeably increased and was stronger than last year as well, although U Aung Myint said he count not put a percentage figure on it. However, Ko Than Aung of Than Tun Aung building materials in Thingangyun township, said demand for construction materials this year was much stronger than for the same period in 2010. Demand for most of our products is about 30pc higher than last year, he said. Cement prices are also a little down but gravel prices are much lower this year because supply is so strong, he said.

US housing starts up in Oct

By Shobhana Chandra and Timothy Homan WASHINGTON Builders broke ground on more homes than forecast in October and construction permits climbed to the highest level since March 2010, signs that housing may become less of a laggard in the third year of the US recovery. Starts decreased 0.3 percent to a 628,000 annual rate from Septembers 630,000 pace that was slower than previously reported, Commerce Department figures showed on November 17. The median estimate of economists surveyed by Bloomberg News called for a drop to 610,000. Building permits, a proxy for future construction, increased 10.9pc. Mortgage rates near a record low and a reduced stock of new properties may benefit builders. At the same time, foreclosures are holding down property values as unemployment at 9pc restrains sales, helping explain why the Federal Reserve and the Obama administration are looking for ways to jumpstart housing. Were in a phase of stabilisation, and demand will slowly start to improve, said Russell Price, a senior economist at Ameriprise Financial Services Inc in Detroit. Builders have been under-producing relative to sales. Inventories have been coming down. Starts were forecast to decline from a previously reported 658,000 annual rate. Estimates of the 82 economists surveyed by Bloomberg ranged from 575,000 to 640,000. The October results compare with last years tally of 587,000 starts, the second-lowest on record. Home construction totalled 554,000 units in 2009, the lowest since record-keeping began in 1959. Permits increased to a 653,000 annual pace in October. They were projected to rise to a 603,000 rate from 589,000 the previous month, according to the survey median. Applications for the construction of singlefamily homes rose 5.1pc to the highest level this year, and permits for multifamily units jumped 24.4pc. New construction of singlefamily houses climbed 3.9pc to a three-month high 430,000 rate from September. Work on multifamily homes, such as townhouses and apartment buildings, decreased 8.3pc to an annual rate of 198,000 after surging 35pc a month earlier. Recent gains in homebuilding have been led by a jump in building apartments and other multifamily dwellings as foreclosures turned more Americans into renters from buyers. Apartment owners are benefiting as distressed properties and stricter mortgage standards erode the confidence of would-be homebuyers. Multifamily vacancies fell to a five-year low in the third quarter, spurring landlords to increase rents, showed data from propertyresearch company Reis Inc released in October. Three of four regions had an October increase in starts, led by a 17.2pc surge in the northeast and a 9.7pc gain in the midwest. Starts fell 16.5pc in the west. Purchases of new houses rose 5.7pc in September as discounted prices lured buyers in some regions. At the same time, builders face competition from cheaper previously owned homes and foreclosed properties. DR Horton, the secondlargest homebuilder by revenue, reported quarterly earnings that missed analysts estimates. The Fort Worth, Texas-based company has been lowering costs and shifting its focus to move-up buyers as demand remains weak. Were still a bit cautious about the overall environment, chief financial officer William Wheat said in a conference call with investors on November 11. It is still a challenging homebuilding environment out there. Beazer Homes, an Atlantabased homebuilder, last week reported a loss in the quarter ended September 30, and cited many challenges facing the industry. The Feds efforts include a commitment to keep the benchmark interest rate near zero until at least 2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries. Some policy efforts may be starting to bear fruit. A report on November 16 showed the National Association of Home Builders/Wells Fargo index of builder confidence rose to 20 in November, the highest level since May 2010. Readings below 50 mean more respondents said conditions were poor. Bloomberg News