Who are Malaysia’s biggest investors?

Malaysian real estate is causing a stir with the Chinese ramping up their stakes.

The Chinese are known for their overseas shopping sprees. Buying property in every corner of the globe has become even more popular due to the weakening Yuan and restrictions placed on the outward flow of capital in China.

Recent data released reveals that the Chinese have been eyeing Malaysian real estate. In fact they have become the country’s biggest spenders overtaking Singapore. The country isn’t shy to
foreign investors
 but residents of China have invested in excess of USD 2.1 billion in real estate in Malaysia between 2014 and 2016. Malaysian’s neighbours have spent small fry in comparison. The Singaporeans have spent USD 985 million for the same period. These figures are according to Real Capital Analytics, a company specialising in collecting data related to real estate transactions, who looked at transactions over the USD 10 million mark.

The Chinese pipping Singapore may not come as a big surprise. Whilst Singapore has always held the title as the biggest outbound real estate investor in Malaysia, recent factors have meant that the Chinese have looked to make their mark elsewhere. This includes the uncertainties behind
Brexit
 and
Trump
 coming to power, plus escalating prices in other cities such as Sydney and Christchurch. There is no wonder that Malaysia has been tipped as a new
safe haven.

Malaysia’s attractive qualities.

This news also coincides with Beijing and Kuala Lumpur’s relationship being knitted closer together. Plus investors are also lured by the prospect of being close to Singapore for retail shopping. Malaysia can also offer an improved quality of life with less pollution if compared with mainland China. On top of this, Malaysia has a much lower price point. This widens the pool for investors who may find properties in other gateway cities out of reach.

Malaysia has been attempting to entice foreign investors for sometime. In 2002 they launched ‘Malaysia My Second Home’. A scheme that offered visas to live in the country assuming that applicants meet certain financial criteria. Out of 32,000 foreigners who now have residency in Malaysia, 8,000 are Chinese. The country with the highest number of residents suggests the sheer strength and interest the Chinese have in Malaysia.

If you are wanting to invest in property in Malaysia, then get in quick before
restrictions are tightened
. For a range of suitable investment options check out Dot Property online
here.


Who are the rich of Malaysia?

Malaysia has its fair share of billionaires according to the annual Forbes Rich List.

Forbes, the American business magazine, is known for their annual rich list. The rankings list the top billionaires from across the world. For this year, Forbes recorded at 13 percent increase in the number of billionaires stating the biggest hike in their 31 year history of the Rich List.

Unsurprisingly Bill Gates, the man behind technology giant Microsoft, tops the charts. Holding this position for the fourth consecutive year, Gates’ total wealth is estimated to be at USD 86 billion. Not far behind Gates is Warren Buffet with USD 75.6 billion.

The highest ranked resident in Malaysia is Robert Kuok. At position 115, Kuok has a net worth wealth of USD 11.7 billion. Starting out as a trader in sugar, flour and rice, today his portfolio includes Kerry Properties, the Shangri-La and Wilmar, a commodities trader.

Kuok is followed by Quek Len Chang in position 202. Chang comes from a family of wealthy counterparts adding to his USD 6.9 billion pot. Although much of his wealth has been inherited from his father, Chan is today involved in finance, property and food industries through his conglomerate Hong Leong Co.

Malaysia’s third richest person is Ananda Krishnan. With a wealth of USD 6.6 billion, Krishnan has been a big name in the telecommunications industry for sometime. Previously the second richest person in Malaysia, he has shares in Maxis, a telecoms company, and Bumi Armada, an oilfield services provider.

Other big names in the top ten of Forbes Rich List are Jeff Bezos, the founder of online retailer Amazon, Mark Zuckerberg, the brains behind Facebook, and Larry Ellison, the co-founder of Oracle. The list is not to rosy for President Donald Trump who moved down 200 places this year. The slowdown of his Manhattan property portfolio cited as a potential reason for this.


Why competition is good

An increasing number of Chinese investors in Malaysia should not be criticised.

The Chinese have a reputation worldwide for buying property in every corner of the globe. The influx of buyers into any market increases values as demand outstrips supply. Much to the benefit of developers but sometimes to the misery of locals who as a result can get pushed out of the market.

In Penang swathes of the traditional shop houses have been snapped in Georgetown by
overseas investors.
 This has caused a stir by locals looking to protect its
heritage
 and wanting to keep values at a level that are affordable.

However one real estate firm, Rahim & Co, have said that Chinese investing in Malaysian property is good for the market. This is contrary to others who have concerns relating to the number of Chinese who are investing in both residential and commercial properties.

The Chinese have been continuing on their spending sprees amid concerns of their depreciating currency. Looking for investments outside of the country, property in Malaysia is an attractive option due to the low values on offer.

Their interest in Malaysian property in particular in Bandar, comes at a time when values in the country are depressed. It is therefore not surprising that the Chinese see this as the
ideal time to buy property.
 And this Chinese interest could be one way to get the market moving again. It will increase consumer confidence which others are likely to catch onto.

After all, competition is healthy.

February 20, 2017


Why live in a township?

Townships tick all the boxes, and some more.

The concept of a ‘township’ is clever. The purpose is to provide residents with a level of convenience for the ultimate lifestyle. It is possible to ensure that this is achieved, and exceeded, by being designed and created to specifically fulfill this.

Urbanisation traditionally occurs organically. Accommodation, services and transport built in response to demand. This kind of development has its pitfalls as it often happens in a haphazard fashion trying to make do what was already exists. This creates challenges for planners and developers alike.

A township is able to address all of these issues from the outset. By monitoring how people live, it can be created to meet the differing demands of people. Nowadays there is a real desire to live among and enjoy the natural landscape around us. Plus there is a strong emphasis on conserving the world. However some are put off by living in complete rural seclusion as they lack the amenities that cities boasts.

Setia EchoHill and Setia EchoHill2

Setia EchoHill and Setia EchoHill2 manage to carefully blend the two. Townships that mix the elements of the highlands, woodlands and wetlands, that are situated in excess of a thousand acres of manicured surrounding. Resident’s get the best of both worlds, convenience but in a rural setting. Plus they tick the green credentials box as they aim to create a sustainable ecosystem.

Cybersouth

When looking for a new property, whether that is for investment or your own use, there are a number of criteria that need to be met. Quality, location, accessability, longevity and security all fall onto this list. Cybersouth, a township geared to families aims to provide a home that is the ideal escape from chaotic city life, but amongst the stunning scenery that it is set in. Just 1.5 kilometres from Cyberjaya and 400 metres from the boundary of Putrajaya, this prime location close to highly regarded schools and other everyday services, makes it the ideal place to live, work, play and study.

Developers building these exciting townships are creating something that city centres cannot achieve. Space to breathe. Everything within arms reach, and primarily homes to last for now and in the future. It is no wonder why many people are choosing townships as a place to live.


Why should I buy my own property?

The sooner you reach the first rung of the property ladder the better!

The aspiration to own your own property is still strong among the
millennial
 demographic of society. People continue to want to own the roof over their head rather than rent someone else’s. But what benefits are there to becoming a homeowner at a young age?

1. Paying off your own mortgage.

As a renter you are lining your landlord’s pockets rather than your own. Should they have a mortgage on the property you will be paying that off for them and possibly providing a surplus that they can reinvest or spend. Become a homeowner means you can pay off your own mortgage, so the sooner you do it the better.

2. Make it as your own and increase its value.

As a homeowner your home truly is your castle. You have the freedom and flexibility to change the property to suit your taste, whether that is creating your own
feature wall
 or upgrading the kitchen or bathroom. Any refurbishment to the property will also add value to the property so it is a win win situation all round. Buying a property that requires work is an advisable move for those prepared to get involved in the work to reap the financial benefits that it brings.

3. Generates an income.

If you have a spare bedroom you could think about renting it out to generate a bit of an extra cash, to help with paying the mortgage or to put towards any works that are needed for the property. Some people avoid investing in their own property as they feel like it gives them less freedom to move but if you fall into this category it is important to make sure you invest in property that could rent well in the future. Speak with local real estate agents to determine what properties let well, for example if you have two bedrooms they should be of an equal size in order to appeal to two sharers.

4. The sooner the better.

The soon you start chipping off at a mortgage, the better. The sooner you will pay it off and the sooner you will be able to start an extra pot of savings for your next move to a bigger property. Even by starting with a small unit will give you a great footing for your future, and provides you will your own bolthole. Those that start buying property earlier in life tend to move up the ladder quicker and make money with every move.


A lot of people want to know when will Bali,
Phuket
 and other destinations in Southeast Asia reopen for quarantine-free travel. With COVID-19 vaccines being rolled out globally, the hope is this will happen sooner rather than later. In fact, Bali and Phuket are tentatively expected to welcome tourists in July.

However, many countries in the region are currently dealing with a third wave of infections that could delay this timeline. The situation is fluid and, as we have seen firsthand, can change at a moment’s notice.

With that in mind, let’s take a look at when several destinations in Southeast Asia will reopen for quarantine-free travel.

Also Interesting:

Demand for Phuket luxury villas surges due to unexpected buyer’s market

When will Bali, Phuket and other destinations in Southeast Asia reopen for quarantine-free travel?

Bali

It will take some time before Bali’s beaches bustle like this once more

The Indonesian government is scheduling a soft reopening for
Bali
 and Bintam in July. Tourists would be allowed to visit and stay in what it is calling “green zones” on each island. While plans are still being formulated, it does appear that movement is set to be restricted to these areas, at least for a few months.

Exactly who can travel to Bali may also be limited.
Tourism and Creative Economy Minister Sandiaga Uno said the country is looking to create travel bubbles with pre-approved countries
 as opposed to welcoming anyone that has proof of vaccination.

Phuket

Phuket is still targeting a July 1 reopening, although these plans now hinge on Thailand finding a way to control a third COVID-19 outbreak.
The local government continues to monitor the situation and a decision will likely be made by the end of May
.

In March, the island announced fully vaccinated tourists could visit quarantine-free starting in July after initially setting an October reopening date
.

Related:

The most interesting villas in Phuket

Bangkok/Hua Hin/Samui/Chiang Mai

Most other tourist destinations in
Thailand
 will reopen for quarantine-free travel on October 1 assuming the country’s vaccination efforts prove to be successful.
A limited number of tourists are going to be allowed to travel to Samui in July as part of a highly regulated pilot project
.

Certain areas of Cebu are welcoming travelers assuming they meet several criteria

Cebu

Several areas around Cebu are already welcoming foreign tourists
 who have been fully vaccinated and tested negative for COVID-19 within 72 hours prior to their arrival. Overseas arrivals also require a valid visa and pre-booked accommodation for at least seven nights in an accredited hotel in order to travel to region. It must be stressed that anyone without a valid visa will be turned away.

The Philippines

There isn’t a lot of clarity as to when other parts of the Philippines will reopen with several areas across the country still under quarantine orders. In May, the government allowed those with a
Philippine retirement visa
 to return throughout the country as long as
they followed all safety regulations
.

Malaysia

Malaysia
 had been gearing up plans for a regional travel bubble with Singapore, Thailand and Indonesia, but these have been shelved with the country entering another nationwide lockdown. Whenever Malaysia does open for tourists, it does look like it will be a staged approach as opposed to letting any vaccinated visitor enter.

More Malaysia:

9 unique things to do in Penang

Singapore

A travel bubble between Singapore and Hong Kong have been delayed for a second time with Singapore now dealing with another COVID-19 outbreak
. Originally scheduled to begin on May 26, the two countries will likely try to launch it again once the situation improves.
The Singaporean government hopes to reopen its border to quarantine-free travel by the end of the year
 assuming its vaccination program is successful.

Visit Singapore:

5 things you don’t know about Orchard Road


Will the Malaysian election hurt overseas property investment?

Now the dust has settled on the Malaysian election with Mahathir Mohamad sworn in as the new prime minister, many overseas property investors are wondering what the result will mean for them. Demand from Chinese investors has been waning recently, sparking some worries, according to Cushman & Wakefield Singapore.

Of course, this alone isn’t really cause for concern. In the build up and immediate aftermath of nearly every major political event, the real estate market tends to go quiet.  Things will usually pick back up once it is clear stability in the country won’t be interrupted. Carrie Law, chief executive of Juwai.com, noted that she doesn’t believe the election results will have much of a long-term impact.

“Buyers motivated by pure investment may hold back to see how events play out,”
she told the South China Morning Post
. “However, most buyers are end users purchasing to study in Malaysia, work here, or retire here. They will continue to buy as long as visa and education policies remain favourable.”

And while Mahathir has criticised Chinese investments in the past,
taking a veiled swipe at the controversial Iskandar
project
during his campaign, experts believe he will protect the country’s pro-foreign investment stance.

Malaysia-based political commentator Phoon Wing Keong was quoted as saying
, “Most existing Chinese-invested projects, including those by China-based developers, would continue unchanged because the new government in Kuala Lumpur needed to send a positive signal to businesses and foreign investors.”

Glut, not
Malaysian election, a problem

While the Malaysian election isn’t likely to burden the country’s property market, a glut of unsold residential units is something to keep an eye. Late in 2017, Bank Negara Malaysia (BNH) found the glut reached its highest point in a decade with high-end units struggling to find buyers.

“Supply-demand imbalances in the property market have increased since 2015. Unsold residential properties are at a decade high, with the majority of unsold units being in the above MYR 250,000 (USD 63,873) price category,” officials from BNM explained.

Renting
 could prove to be a solution. Home ownership in Malaysia is viewed as extremely important, but it may not be as big of a priority with the younger generation. This group may be willing to choose location and lifestyle over ownership. This is likely to create a robust rental market and that would bring in more real estate investors looking for yields.

“It could be time to move away from the Asian mindset on home ownership as the absence of home ownership does not imply welfare deprivation,”
CBRE-WTW managing director Foo Gee Jen explained to The Sun Daily
.


Win-win for both property developers and buyers

The Malaysian government granted property developers the right to provide loans to property buyers and it’s a win-win for both parties.

The initiative is designed to assist homebuyers who are unable to get a full loan from the bank. Sometimes homebuyers are only provided with a loan to cover 70 percent of the property costs from the bank and they may only have the other 20 percent of their own funds. Allowing property developers to loan an additional 10 percent (or whatever is needed) will increase real estate purchases.

Developers can charge individuals buying properties from them an interest rate between 12 percent
 (loans with collateral)
 and 18 percent
(without collateral),
according to the ministry of Urban Wellbeing, Housing and Local Government.

Property developers have to obtain a money lending license from the ministry in accordance to the Moneylenders Act 1951 in order to lend to buyers.

The initiative creates new channels for developers to gain profit and allows those to
purchase a home
who could not otherwise – it’s a win-win.


“Winners’ jump the gun

The Asia Pacific Property Awards, part of the International Property Awards, are set to take place in Kuala Lumpur, Malaysia, this week.

Some property developers and real estate agents have already claimed they have won awards, which is correct, although the full list of winners in the numerous categories will not be released by the organisers until Saturday – after the event itself. So despite a plethora of press releases, developers and real estate agents have only been told they have won either a ‘Highly Commended” or “Five Star” accolade.

A spokesperson for the International Property Awards told
Dot Property Group
: “Successful competitors have been told that they have won an award but do not know at what level, whether it is a Highly Commended or a Five Star.

“The official winners will be announced on April 8 at our Asia Pacific Property Awards, with a full, complete list of winners available on our website from April 9.

“We are unable to give full information on winners until that point,” the spokesperson added.

Dot Property Group
 will be publishing a full list of Asia Pacific winners as soon as they are made available.


Winning an award can build trust and add value to your brand

Winning an award has helped firms like Plus Property elevate their brand

Real estate in Southeast Asia is one of the most diverse sectors in all the world. On the consumer side, you have the local public who are at various levels of the home buying ladder. Then you have international investors and holiday home seekers who believe in the region’s potential and love the beautiful destinations.

It’s a similar story when you look at the players in Southeast Asia’s real estate industry. You have the large homebuilders that have been in business for decades, boutique firms wanting to provide specialization and new developers with passion and vision. Real estate agencies are much the same with companies of all shapes and sizes contributing to growth in the region.

Winning an award helps build trust amongst the public while also elevating your brand. Let’s take a look at some examples of how winning at the Dot Property Awards has done this for Southeast Asia’s top developers and real estate agencies.

Winning an award starts by entering!
Click here to enter this year’s Dot Property Awards
!

Staying on top

Sansiri
 is highly regarded in Thailand, but that doesn’t stop the developer from building upon its past successes. Entering the Dot Property Awards provided the homebuilder with the chance to add another accomplishment to its impressive CV. Each honor Sansiri wins is a reminder to everyone that the company still strives to be the best after all these years.

“It is a great honor for us to be recognized as Best Developer Thailand at the Dot Property Thailand Awards 2019. Winning an award is truly rewarding for our company and once again highlights the hard work of everyone at Sansiri. People from both Thailand and abroad put their trust in us and we will continue to provide the best for all our clients in terms of design, quality, service and experience,” Apichart Chutrakul, Sansiri Chief Executive Officer stated.

Confirmation of ideology by winning an award

Wilson K. Granadis (center), Vice President for Sales and Marketing, and Crystal Chloe Ong-Chua (left), Citrineland’s Internal VP for Sales and Marketing, received the award from Dot Property Magazine Editor in Chief Cheyenne Hollis (right)

Many developers in Southeast Asia are focused on an ideology that drives their efforts. For Citrineland, the firm wants to make sure it provides high-quality properties at affordable prices. Being in contention at the Dot Property Awards allows developers such as Citrineland to receive recognition for committing to an ideology and delivering on promises.

“Winning Best Developer in Cebu at the Dot Property Philippines Awards confirms that our advocacies are very much aligned with that of the discerning customers. It means we are doing the right thing and it inspires us to build more and build better so more Cebuanos would be able to enjoy the perks of having homes of good quality at affordable price points,” Crystal Chloe Ong-Chua, Citrineland’s Internal VP for Sales and Marketing, explained.

Building credibility and creating motivation

Anchor Land Holdings, Inc. President Elizabeth Ventura (center) accepts the firm’s awards from Dot Property Group Founder Ben Neve (right) and Sunniya Kwatra, Dot Property Head of Sponsorship Sales

Those firms that do win at the Dot Property Awards benefit both in the eyes of the public as well as internally. Being an award winner rewards everyone at a company for their contributions during the year. It can also be a source of motivation for staff to perform at an even higher level moving forward. The double benefits of winning is something not lost on former winner
Anchor Land
.

“In the local market, credibility is key. It gives people a reason to believe in us and what we are doing. That is just one reason winning this award is important. Another reason it is important is that winning motivates us to do better. Everyone at Anchor Land understands that we must keep improving to ensure we are meeting the needs of our clients,” Anchor Land Holdings, Inc. President Elizabeth Ventura said.

Want to be considered for 2020?
Click here to enter this year’s Dot Property Awards
!


Workplace of the future

A new report from real estate firm JLL has revealed that more and more companies are using the design of their work spaces to express their company culture and values to employees.

Rather than the faceless cubicles of the past, today’s offices are being designed to engage workers, drive financial benefits and grow business performance.

“Companies have spent a significant amount of time refining strategies to increase engagement through the efficiency of their workplace and effectiveness of their employees,” said Grant Morrison, Director of Workplace Strategy, Asia Pacific, JLL.

“But many are realising they may have been undervaluing the only resource with unlimited potential – their workforce. In response, we’re seeing a trend toward looking at organisational culture and creating workplaces with a personality and expression to match, thus making employees more likely to be engaged when they spend time in the office.”

The benefits of an engaged workforce and the problems associated with disengagement are well-documented. Recent studies peg the cost of disengagement in the U.S. at US$ 450 billion to US$ 500 billion per year. Conversely, research shows organizations with engaged employees experience almost 150 percent higher earnings per share compared to their competition. Companies that have taken the next step, however, are reaping even more benefits. Those who actively developed their culture returned more than 500 percent higher revenue and 750 percent higher income.

JLL’s report, Fully Engaged, introduces the concept of “workplace expression” as being the final piece of the “3 E’s” of employee engagement. Significant gains have been made over the last two decades in the first two “E’s” – efficiency and effectiveness. Adding the final piece – expression – to the mix can create a dynamic and compelling environment that reconnects employees to their purpose, directs renewed energy and engagement, while driving innovation and productivity to new levels.

“Would you bring your best friend to your office?” asked Morrison.

“The answer to that question is very telling. Culture is intangible and hard to actively measure, yet it’s easy to sense when you walk into an office. Workplace expression shifts the office from being a passive background to an active cultural lever used to shape employee perceptions, motivations and behaviours. Allowing it to become a location where a company’s vision and mission manifest itself can easily transform a place to work into a best place to work.”

Morrison added: “This is particularly relevant to companies in Asia given that many countries in the region are battling with high attrition rates among staff and a highly competitive environment to recruit the best candidates. Workplace is increasingly a key differentiator.”

According to the report, four principles to consider when creating a powerful workplace expression include:

A deliberate office design that allows cultural values to inform, direct and generate employee engagement.

A combination of office design, objects and systems to show the company appreciates its people and the contribution they make.

An environment that empowers employees by giving them choice in their daily work habits.

An atmosphere that boosts internal buy-in and direction.

Download the ‘Fully Engaged’ report here.


WSBE17 Hong Kong highlights the best in sustainable building

Jointly organised by the Construction Industry Council (CIC) and the Hong Kong Green Building Council (HKGBC), WSBE17 Hong Kong will take place on 5-7 June 2017 at the Hong Kong Convention and Exhibition Centre. The event will bring 1,800 industry experts from 50 countries together and offer an opportunity for delegates to “Put Ideas into Action” and transform the world’s built environment.

WSBE17 Hong Kong is the first-ever SBE Series’ world conference to be held in Hong Kong. The theme for the event is “Transforming Our Built Environment through Innovation and Integration: Putting Ideas into Action”. Activities scheduled include 100 parallel sessions, exhibitions with business matching, an international youth competition, green building & eco tours and networking opportunities.

The three-day showcase is seen as the ideal platform for key decision makers to gather and explore the latest developments in the sustainable built arena. Some of the biggest policymakers, global figures and leading experts, such as Matthew Cheung Kin-chung, Su Yunshan, Christiana Figueres, Peter Guthrie, Thomas Auer and Raymond Cole, will be in attendance.

WSBE17 Hong Kong brings together the top findings from 20 regional conferences held worldwide last year, allowing 400 business professionals and academia to present their cutting-edge findings to those in attendance. Climate change and sustainable development will be among the key topics disused.

Click here to find out more


Yangon agent: buyers beware

The Yangon residential property sales market is in a very different condition from this time last year according to
research from real estate firm Slade Property Services
.

The amount of new projects being launched has skyrocketed, and blue construction hoardings are now a familiar sight around the city however, during the past six months this increase in available units has been matched with a marked decrease in take-up, with the market undergoing a noticeable slowdown.

This is partly due to an oversupply of stock, as the Law continues to restrict the majority of real estate purchases to Myanmar citizens, but there is also a marked climate of uncertainties having a negative effect on buyers’ sentiment.

The firm explored these factors in more depth below.

CURRENT AND FUTURE SUPPLY

We have seen a continuation and expansion of the trends that began to surfacein 2014, namely the launch of many new residential projects. In 2014, the market saw 4,150 new residential units, itself a large increase on 2013 stock. During 2015 the number of new units brought to the market was up almost 150 percent on 2014’s tally, with more than 6,000 new units being launched since the start of the year.

Out of all of these new projects, it is our understanding that only one or two schemes are fully-funded.  All the others are relying on pre-sales to raise the capital with which to complete, or even commence, construction. In a market with a large consumer base this would not be a problem’ however the Myanmar market is extremely limited in its potential sales base for a number of reasons.

Firstly, until now only Myanmar citizens have been able to buy property. A Condominium Law, which will allow foreigners to buy up to 40 percent of units in condominium towers, has just been passed in parliament however it is yet to be signed by the President. It is not yet clear exactly which projects will fall under the law’s definition of a condominium.  It seems unlikely that many existing or pipeline schemes will benefit from this new law.

Secondly, only a limited number of Myanmar citizens possess sufficient capital to buy real estate. As a result of this limited sales base, supply is outstripping demand and it is unlikely that all of the units currently on the market will be sold. Without the necessary uptake those schemes relying on pre-sales may never complete, or even begin construction. Slade Property Services predicts that in the next six to twelve months, we will see the failure of several of these schemes.

Such a turn of events will spook the market in the short-term but will also prove advantageous to those projects which already have funding in place, as long as they can get the message out that they are secure investments. For this reason a strong and clear marketing campaign is essential to a successful project.

SALES PRICES AND TAKE-UP RATES

The average price for a unit in projects launched during 2015 was US$ 368 per sq ft (based on an exchange rate of 1,285 MMK: 1 US dollar). At the same time the average size for a unit was more than 2,500 sq ft. Developers continued to prefer building very large, family-sized units, with three or more bedrooms.  When these two factors are combined, and the price per sq ft is applied on this large scale, many units end up costing as much as US$ 500,000 and this puts them out of the reach of all but the richest Myanmar citizens. Despite this fact, we have not observed any significant decreases in prices at most projects over the last year, and this could be seen as a contributory factor in the current slow take up rate for residential real estate.

Indeed the relative success of the HAGL project, which has achieved almost 40 percent take-up of its first two towers, could logically be attributed to its comparatively low prices (both on a per sq ft and an overall basis.)

MARKET SENTIMENT

In our opinion however, oversupply and high prices only go so far to explain the current market immobility. More influential, we feel, is an underlying climate of uncertainty. This uncertainty takes many forms.

Firstly, buyers and developers are facing uncertainties regarding land title. Freehold is a rare commodity in Myanmar, but there is currently no real clear legal differentiation between land and building title, so it has frequently been unclear what product the buyer is actually purchasing, leaving many investors with a different product from that advertised.

More recently, projects such as HAGL have successfully marketed properties on a 70-year BOT long lease, making it very clear to buyers what they are purchasing. This sort of approach gives investors piece of mind and the ability to plan their portfolios over a defined period of time.

Despite this fact, however, investor and buyer confidence has recently been severely shaken by the cancellation of five projects close to the Shwedagon Pagoda in central Yangon. The most prominent of these were Dagon City 1 and Dagon 2, both located on Ministry of Defense BOT land.

Despite receiving planning permission and commencing pre-sales, the projects sparked concerns by the public that views of the pagoda would be blocked, and that the developments would undermine the foundations of the pagoda. In the face of planned demonstrations across the country, led by hardline nationalist monks, the President ordered the projects’ cancellation.

Compensation and an alternative site have been promised to the developers and buyers, but until the details of this are finalised and announced a great deal of nervousness and uncertainty remains.

This is likely to have an impact the sales rates at all developments in Yangon, particularly those being funded by presales, and those on BOT land.  It remains to be seen how severe this impact will be and how long this negative sentiment will remain.

An additional, albeit temporary, factor in the slowdown of interest was the period of Buddhist Lent beginning in July. This three month period of devotion and religious reflection is traditionally a time when it is rare for Buddhists to move house or make real estate purchases. This had a noticeable impact on the number of sales taking place in the market during Q3 2015.

Another factor causing purchasers to hold back was the election and its aftermath.  In the run-up to the vote it was by no means clear what the outcome would be, and even now that the results have been released many uncertainties remain, as the Myanmar system lays out a timeline of several months for the forming of government and the selection of a President.

Both major political parties have promised to continue the country’s economic reforms and current pro-business attitude, but until the new NLD-lead parliament sit, and starts to outline its policies, buyers are likely to remain cautious.

Finally, the year-long devaluation of the Myanmar Kyat in relation to the US Dollar is causing many buyers to hesitate. The exchange rate has dropped almost 30 percent from around 1,000 MMK:1 US$ to 1,290 MMK:1 US$ in the space of less than a year. As a result, those apartments priced in US dollars are becoming more and more expensive in real terms to those Myanmar citizens who are paid in their local currency. This is particularly worrying for schemes with staggered payment plans, as buyers have no way of predicting how much each future payment installment will be worth in real terms. With some payment plans lasting over a year, and the rate continuing to rise, buyers are afraid that they will end up paying much more than they originally budgeted for when agreeing to buy the unit.

The Central Bank has recently introduced some new measures to combat the weakening of the Kyat, and exchange rates have fallen a small amount already, so it is hoped that this will not be a long term problem. However in the meantime, developments quoting prices in Myanmar Kyat, or applying a set US dollar exchange rates for all future payment installments will attract more buyer confidence than those continuing to charge the same price in US dollars today as at project launch.

Whilst no one issue is in itself entirely problematic, the combination of all of these factors is proving extremely damaging to the residential property market. Whilst some factors, like the election, will hopefully diminish in time, other issues such as the Myanmar Kyat devaluing can, and should, be targeted directly to lessen its impact.

FUTURE RESIDENTIAL MARKET OUTLOOK 2016

The future looks set to continue many of the trends begun during 2015. More projects are due for launch and the number of potential purchasers remains static, at least for the time being. The Condominium Law has been passed by parliament sooner than expected, but until it is signed into law by the President it is difficult to predict what impact it will have on the market.

That said, we have already noticed a sudden spike in residential uptake and interest from Myanmar citizens hoping to benefit from the future implications of the law.

Similarly, it is impossible to predict what policies the new NLD-dominated parliament will introduce, and what impact these will have on the residential market. The NLD has promised to continue economic reforms once in power, but the speed of any changes may not be very fast, particularly as the NLD is unused to governing. As a result, we predict a slow initial six months of 2016 before any significant changes occur to alter the economic or business environment.  In this climate, a prudent developer would do all in its power to reassure the public that it remains a safe and stable investment.


Yangon to see a stable year

Over past years Myanmar’s economic capital of Yangon has enjoyed a flurry of real estate activity following the loosening of military rule and a gradual process of liberalisation however, 2015 proved to be a fairly quiet period for the city’s real estate as the market cooled in the run up to November’s elections.

The torrent of foreign investment slowed, causing office rents to slide and residential sales to come to a halt, according to real estate firm JLL.

Andrew Gulbrandson, Head of Research and Consulting for JLL Thailand who is responsible for coordinating much of the firm’s ongoing consultancy work in Myanmar, said: “After peaking near US$ 100 per sqm per month in mid-2013, Grade ‘A’ office rents have since tumbled by between 35 percent and 40 percent as new supply has entered the market, yet despite the decline in rents, occupancy has fallen, most noticeably in existing projects.”

Observations by JLL showed most tenants have sought less expensive accommodations in newer non-prime buildings, and other alternatives such as villas, hotels, and retail centres, while some have left the market.

“Based on feedback from our clients in the country, many occupiers are still in the wait-and-see mode adopted before the election. As a result, it’s likely that the first half of 2016 will be relatively quiet before activity picks up in the second half when the new administration is in control,” said Gulbrandson.

Foreign investors have played an important part in the early development of Yangon’s real estate markets with investment coming from all over Asia; from well-known developers based in Singapore, Korea, and Japan to lesser known but equally impactful investors from Thailand, Hong Kong, China, and Vietnam.

The market is also attracting investment from more global investors, including the International Finance Corporation (IFC), the private sector arm of the WorldBank.

To date IFC has disclosed investments totaling almost US$ 200 million in project specific engagements such as the Shangri-La Hotel and Executive Residences, as well as entity-level investments such as the recent USD 25 million loan to CityMart – Myanmar’s leading supermarket operator.

“Based on recent discussions with clients, foreign interest across sectors in Myanmar is still very high. However, with numerous limitations in a number of sectors, but most pertinently, banking, we may see lower levels of foreign investment in 2016 than in previous years,” added Gulbrandson.

Looking ahead, Gulbrandson said he believes that 2016 will be a year of moderation, and perhaps even stabilisation, in the city’s real estate market as a whole.

“Though many challenges remain, we believe the outlook for this dynamic landscape in 2016 to be positive.

“So far, the formation of the new government has been smooth, easing concerns over the post-election political uncertainty. Ongoing ambiguity over the structure of the new Government that has built up legislative backlog affecting a number of regulations should be eliminated when the new government is formed.

“Business activity that has been held due to these concerns should resume and should help encourage demand in Yangon’s rea estate market.

“In addition, a more cautious approach that investors and developers have taken should lead to a decline in future development project launches, allowing the existing supply to be gradually absorbed,” he explained.