Yoma woos overseas Myanmar nationals to overcome property hurdles

SINGAPORE — Low property costs and high rental yields should make Myanmar an attractive destination for real estate investors, but regulatory hurdles and an underdeveloped financial industry make it difficult for foreigners to participate in the growth of this rapidly emerging market.

Myanmar’s laws prohibit foreigners from owning residential property in the country. Although the authorities are working on amending its Foreign Investment Law to allow this, it is still too early for investors to rush in because of the uncertainty, said Mr Elmar Busch, Managing Director of Real Estate at Singapore-listed Yoma Strategic Holdings.

“It’s premature, I would say. It has to be a little clearer as to when the actual law comes out, how it’s being defined. At the moment, based on hearsay, the indication is that only 40 per cent of condominium developments will be allowed to be purchased by foreigners,” he said.

Besides legal uncertainty, an immature financial industry means that no mortgage financing is available for property purchases, although developers provide instalment schemes that can range from 18 to 21 months.

With these restrictions affecting foreigners, Yoma is focusing instead on attracting overseas Myanmar citizens to buy property developed by the company.

It opened its first overseas sales office in Singapore yesterday to woo Myanmar nationals working here.

“We’re targeting the middle-class Myanmar nationals who are working in Singapore. They live in quality homes here and eventually, when they go back to Myanmar, they want something of similar standard,” said Mr Busch.

About 20 per cent of the 100,000 Myanmar nationals living and working in Singapore are in his target group, he estimated.

The main selling point of Myanmar properties is their affordability. Prices have risen by 50 to 60 per cent over the last two years, but levels are still well below international standards.

A condominium unit at Yoma’s Star City development costs an average of US$150, or S$190, per square foot. In comparison, a private home in Singapore suburbs is typically priced above S$1,000 psf.

There are also those who buy property in their home country for investment purposes, as the influx of foreign companies setting up base in Myanmar has increased rental demand, with yields now hovering at 9 to 15 per cent.

Despite the growing demand, the housing market is still under-supplied, Mr Busch said, noting that only 1,500 apartment units were built between 1998 and 2011. Supply has since increased, with about 1,100 apartments built last year.

“More are coming on stream, maybe in the next few years. We will see 3,000 to 4,000 units, but that is nothing compared to the demand that’s being created in the area,” he said.