colliers international myanmar market beat vol. 33 property related news
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News summary for property professionals interested or involved in Myanmar.TRANSCRIPT
September 17th | 2014
Kempinski to Open First Myanmar Hotel in November
Switzerland-based Kempinski Hotels, Europe’s oldest luxury hotel company, announced that it will
open its first property in Myanmar, Kempinski Hotel Nay Pyi Taw in November. The 141-room and
suite hotel will begin welcoming guests on November 1, in time for the first ASEAN Summit to be
held in the country. Reservations can now be made via Kempinski’s website, the company said. The
newly-built property is located near the Myanmar International Convention Center (MICC), a short
drive from the capital’s international airport. Spread over four villas, the hotel features 141 rooms
and suites, including the Grand Royal Suite, which, at 1,000 square meters, is the largest in the
country, the company claimed.
Source: Myanmar Business Today (07th September)
Myanmar City U-Turns amid Outcry over Secret $8-b Housing Deal
Authorities in Myanmar’s biggest city have backed down on plans to award an $8-billion construction
contract to a barely known firm following a public outcry over its transparency in a country notorious
for graft and vested interests. The Yangon region government said an open tender would be held
for a huge low-cost housing project, one of the biggest of its kind in Myanmar, just days after the
city’s mayor stunned lawmakers by announcing a deal had been struck in secret with a firm set up
only nine months ago.
The project, covering three townships in the west of Yangon, seeks to address a shortage of
affordable accommodation in a city expected to swell far beyond its six million residents as business
and tourism grows, construction booms and investors arrive from Thailand, Singapore, India and
Japan. It aims to provide 20,000 low-cost housing units, five bridges to connect the area to the rest
of Yangon, a school and a home for the elderly. “We just can’t understand who is behind this and
why they did it secretly,” said a minister with the Yangon region government, who declined to be
identified.
Source: Myanmar Business Today (09th September)
Second City Speculation Sees Land Prices Double
Land prices have exploded west of Yangon following an announcement by the mayor of Yangon that
it will be the site of a new city. Though information on the project proposed by Mayor U Hla Myint is
still scarce, it has proven enough to drive a flury of speculation in the area. Prices have doubled in
a week, said Ko Min Min Soe, Mya Pan Thakin real estate agent.
Land prices in the village used to be about K7 million to K15 million an acre, though land with road
access stood at closer to K100 million an acre, he said. With the speculation rush, land now costs
at least K20 million an acre on August 29, and is showing no signs yet of coming back down, said
Ko Min Min Soe. There had been only moderate interest in the area until U Hla Myint’s speech at
the hluttaw on August 22. He said that a new city is to be built between the Pan Hlaing River and
Twante canal, in the area of Twante, Kyeemyindaing and Seik Gyi Kha Naung To townships on
some 30,000 acres of land. U Hla Myint said it was to be built by previously low-profile firm Myanma
Saytannar Myothit Public Company, and claimed it could cost as much as US$8 billion to complete.
However, officials have since said an open tender will be set up at a later date following an outcry
on the project.
Source: The Myanmar Times (01th September)
Vietnamese Investors to Pour in $1.5b in Myanmar
The Association of Vietnamese Investors in Myanmar (AVIM) hopes to raise its investment in
Myanmar to $1.5 billion by 2015 in making Vietnam one of the five largest foreign investors in that
country. AVIM chairman Tran Bac Ha unveiled the target at a meeting with Speaker of Union of
Myanmar Assembly Thura U Shwe Mann in Hanoi, Vietnam News Agency (VNA) reports. Ha said
businesses will work to help enhance two-way trade to $650 million to $700 million, and the number
of Vietnamese tourists to Myanmar to 35,000 in the future. AVIM representatives proposed that
Myanmar’s government and parliament develop an “open-door” legal system and improve
investment incentives for foreign investors.
Established under an initiative by the Bank for Investment and Development of Vietnam (BIDV),
AVIM comprises 76 members including Petro Vietnam, Vietnam Airlines, Hoang Anh Gia Lai Group
and Song Da Corporation. At present, Vietnamese investors have seven projects worth $600 million
in Myanmar with the biggest being Hoang Anh Gia Lai Group’s complex of hotels, apartments and
offices worth $440 million. Fifty-six Vietnamese businesses have been licensed to operate in
Myanmar so far, according to Myanmar Investment Commission (MIC) data.
Source: Myanmar Business Times (10th September)
Gov’t Eases Restriction on Foreign Economic Activities
The Myanmar Investment Commission (MIC) has eased some restrictions on economic activities for
foreign businesses, removing 11 items from the prohibited list of economic activities previously
declared, according to the commission. These economic activities lifted for foreigners include jade
and gemstone prospecting, exploration and production, small and medium scale mineral production
and distribution of newspapers, magazines and journals in Burmese and other national ethnic
languages. The commission also cut the list of economic activities previously allowed only in the
form of joint venture with local Myanmar citizens from 42 items to 30. The commission has so far
during this year permitted nearly 30 projects for investment by local entrepreneurs, while 60 for
investment by foreigners. Since June, official figures show that Myanmar attracted investment from
34 countries, totaling $46.71 billion.
Source: Myanmar Business Today (07th September)
MIC Announces Investment Categories with ‘No Tax Exemption’
The Myanmar Investment Commission (MIC) has prescribed some local and foreign investment
business categories ineligible for exemption and relief from commercial tax and custom duties,
according to a notification of the commission. These categories of businesses include manufacturing
of alcohol, beer, cigarettes and related services; distribution of gasoline, diesel, machine oil and
natural gas; and vehicle services and low technology and low investment industries which can be
carried out by Myanmar nationals except for industries that require a large labor force. The non-tax
exemption investment businesses also comprise other businesses such as renting forest areas for
agriculture and logging; construction of buildings and sale of them; vehicles and machinery rental
service; and restaurants and food-selling business.
Source: Myanmar Business Today (03rd September)
Private Companies Get Green Light for Airport Operation
The heads of five local airports in Myanmar will be allowed to approach private companies to handle
their operations, the Myanmar Civil Aviation Department has said. Kyaw Soe, head of the Directorate
of Civil Aviation, said: “Firstly, we have arranged to give the green-light to Bagan-NyaungU, Heho,
Tachilek, Thandwe and Kyaukphyu airports.” Bagan-NyaungU Airport, which has seen a massive
influx of tourists, could draw the most attention from private companies. The Directorate of Civil
Aviation got approval late last year to oversee the privatisation of 30 airports, which will be leased
or sold to private companies. The 30 airports are: Bagan-NyaungU, Heho, Dawei, Putao, Monghsat,
Kawthaung, Myitkyina, Pathein, Myeik, Bhamo, Lashio, Bokepyin, Kalay, Magway, Mawlamyine,
Khamhti, Pakokku, Hpa-an, Homemalin, Kyaukhtu, Aniskhan, Loikaw, An, Kokogyun, Monywa,
Sittwe, Thandwe, Tachilek, Kengtung and Kyaukphyu.
Source: Eleven Myanmar (07th September)
Local Construction Companies to Be Graded for Advent of AEC
Myanmar Engineering Society is inspecting the quality of local construction companies with the aim
of promoting competitiveness ahead of the Asean Economic Community (AEC). It plans to release
their grades soon, Aung Myint, vice-chairperson of the Engineering Society, said at a press
conference on Myanmar Build & Decor 2014, held at the Sule Shangri-La Hotel. “The society is
scrutinizing construction companies in a bid to promote the competitiveness of local construction
companies in the AEC that will emerge on December 31, 2015 and we will designate grades [for
firms]. Emergence of the AEC will bring not only opportunities but also challenges to the country.
The best qualified companies should easily compete in the AEC,” he said. “Normally, construction
companies have to carry out their registration at the Directorate of Company Registration. But, we
are planning to make grading. Myanmar Engineering Council will scrutinize them. “The government
passed the Myanmar Engineering Council Law on December 16 last year. Under the law, the council
has an obligation to inspect the quality of work done by construction companies. This is for the long-
term. There should be standards at a time when the AEC emerges in 2015. The council will carry
out the grading – A, B, C and D – based on facts such as the number of professional engineers and
their standards,” he said.
Source: Eleven Myanmar (13th September)
Myanmar Can Raise Per Capita Income 500% By 2030
Myanmar’s economic growth rate could rise to 9-10 per cent if the country invests more in human
capital and infrastructure and this could push its per capita income up more than 500 percent by
2030, according to a new report by the Asian Development Bank, “Myanmar: Unlocking the
Potential”. If Myanmar pursues the correct strategies per capita income could rise from about
US$900 now to about $5,000 in 2030, the report says. “The country needs to think very strategically
what the key trends are and what could be the potential drivers for growth,” Cyn-Young Park, an
assistant chief economist at the regional development bank, told Myanmar Eleven on the sidelines
of the report’s launch yesterday. “First, the government needs to focus on laying the foundation in
order to accelerate public-sector reforms, ensure macroeconomic financial stability, and create a
business-enabling environment through appropriate regular framework and strategic investment in
infrastructure,” she said. “Infrastructure needs substantial investment. Myanmar has a limited supply
of electricity. The country will need as much as US$80 billion by 2030 for meeting the demands rising
from a high-growth scenario in major infrastructure systems. The country will need $5 billion a year
on average by 2030,” she said. “The fundamental thing for inclusive growth is to create jobs, create
economic opportunities, and lay a foundation for agricultural and rural development. That would
create opportunities for rural society. That will be immediate help for people living in the countryside.”
Source: Eleven Myanmar (12th September)
Thilawa SEZ Says It Has Signed Up 18 Companies So Far
Eighteen local and foreign companies have signed deals with the management committee for
Thilawa Special Economic Zone to open plants in its first phase, which covers 400 hectares south
of Yangon, a member of the committee said. “We have signed deals with 18 companies, including
companies from Cambodia, Hong Kong, Japan, Singapore, Taiwan and the United States as well
as three Myanmar companies,” the executive said. “They will operate factories such as electronic
manufacturing, construction materials production, and glove and garment manufacturing. US-based
Ball Corporation is one of the investors,” the executive said. “Ball Corporation will invest US$40
million in the first phase and later we hope we will increase up to $100 million. We hope our
production will start sometime in July 2015. We will produce and sell only beverage cans,” Min Tala
Nyan, Ball Corporation’s country manager.
Source- Eleven Myanmar (12th September)
Malaysian Firm Makes Maiden Entry into Myanmar’s Property Market via Zaykabar
Malaysia-based Ho Hup Construction Co Bhd is set to make its entry into Myanmar’s lucrative
property market through a joint venture with local conglomerate Zaykabar Co Ltd. The firm’s 70
percent-owned unit, Ho Hup Myanmar, signed a joint venture agreement with tycoon Khin Shwe-
owned Zaykabar for “Z Villas 191 Units Land” development in Mingalardon Garden City in Yangon.
In a filing with Bursa Malaysia, Ho Hup announced that it would develop a high-end residential
property project with a gross development value (GDV) of $200 million (RM636 million) in central
Yangon. Zaykabar is the registered holder and beneficial owner of “Z Villas 191 Units Land” where
it has agreed to grant the sole and exclusive rights to develop the land to Ho Hup Myanmar into
residential units. According to the deal, Zaykabar will be entitled to a sum of cash equivalent to the
aggregate of the land cost which is pegged at $40 per square foot and shall have 60 percent of the
total net profit of the project.
Source: Myanmar Business Today (15th September)
YOMA Strategic Finalizes Major Asset Purchases
Yoma Strategic Holdings Ltd said it will be boosting its diversified business portfolio in Myanmar with
the additional acquisition of economic interests of land development rights (LDR) in its property
development, Pun Hlaing Golf Estate (PHGE). The company’s flagship high-end residential property
development at PHGE will be expanded with the acquisition of economic interests of additional LDRs
for future residential and commercial developments, Yoma said. The new LDRs will be used to add
more residences along with commercial developments to cater to the increased demand from the
existing and projected future occupants at PHGE, the Singapore-based firm added.
Andrew Rickards, CEO of Yoma Strategic, said, “PHGE has established itself as one of the most
desirable locations to live in Myanmar today and we are delighted with the opportunity to expand the
number of developments on the estate.” Yoma Strategic had previously launched a number of
project developments within PHGE such as Ivory Court Residence, Lakeview Apartments, Ivory
Court Villas, Rose Garden Villas and Bamboo Grove Garden Villas. The total land area represented
by the LDRs being acquired for these new developments totals approximately 31.3 acres. The group
is also acquiring economic interests in an additional 12 acres of LDRs adjacent to the Early Years
Centre managed by Harrow International Management Services to be used for the development of
an international school, and the rights to operate the PHGE Golf and Country Club which includes
approximately 219.2 acres.
Source: Myanmar Business Today (15th September)
Banks Brace For September Licenses
The domestic financial industry is rife with speculation on which foreign banks will receive licenses
to operate, though local banking players say little about the process has been revealed to them. The
licensing process is expected to conclude this month, with between five and 10 foreign banks likely
to receive licenses, out of the 25 banks still in the hunt in mid-July. Yet foreign bank representatives
and Central Bank of Myanmar officials are staying mum on the process, leading to intense
speculation about who will eventually be declared a winner.
Four banks from Japan, Thailand and Malaysia, three from Singapore, Taiwan and South Korea, as
well as one each from Australia, China, France, India, Mauritius and Vietnam, were included on the
central bank’s mid-July list of shortlisted competitors. United Kingdom-based giant Standard
Chartered was a surprise omission from the shortlist, as it also has a Yangon representative office
and was thought to be interested in a license. The firm’s representatives said they had decided not
to pursue a license due to commercial reasons, though left the door open for future involvement in
Myanmar. Myanmar Bankers Association officials told The Myanmar Times the Central Bank has
not extensively consulted them on the process or openly shown the selection criteria.
Source: The Myanmar Times (15th September)
Dala in Limbo After Speculation Rush
The ongoing speculation rush in the Yangon new city area to the west of the existing city is not the
City's first, and likely not its last. Nearby Dala township, across the Yangon River from downtown,
experienced a similar speculation boom a year ago. While the latest Yangon new city rush occurred
following a surprise announcement by the mayor last month that the area would be the site of a
US$8 billion city extension, the Dala township rush a year ago came after an announcement that a
bridge would be built linking it with downtown Yangon. Last year’s bridge announcement set off a
buying rush, with speculators driving up land prices overnight. Yet insiders say that since the initial
rush, it has been quiet in Dala Township. “Nobody’s buying land in Dala Township,” said U Hla Chit,
an area real estate agent.
Prices are still high a year after the rush, even though some officials have cast doubt on when the
bridge will be built. “There are inquiries into local property but people never buy because the land
prices are still too high from last year. Although prices aren’t increasing any more, they’re not
dropping, either, after we heard about the bridge,” he said. U Hla Chit said he pegged a relatively
central lot of 2400 square feet from K50 to K70 million, while the more removed of the 60 by 40 ft
lots can be K45 million. Some lots on main roads are asking over K100 million. Dala Township has
long been overlooked in favor of nearby Yangon, as it is a tough place to get to. Currently,
transportation to the area requires a ride on an often-crowded ferry across the Yangon River, or a
time-consuming trip by land to the nearest bridge over the Hlaing River.
Source: Myanmar Times (15th September)
Yangon Mayor Issues Stern Warning To Illegal Builders
Illegal building in Yangon, constructed without approval from the government, “will be dealt with,”
which could include demolishing the structures, the city’s Mayor U Hla Myint warned at a session of
the regional parliament. Despite facing legal action and the suspension of projects, the illegal
construction of buildings has not declined, so the wrecking ball option is being considered now, he
said. “As the City Development Ace of 2013 has already been enacted, illegal buildings will be
harshly dealt with. We are considering to go even as far as demolishing them,” U Hla Myint said.
Officials from Yangon City Development Council (YCDC) are negotiating with legal experts, regional
government and other relevant organizations on the enforcement measures to address the issue.
Contractors who build without proper permits will face charges under Article 68 of the City
Development Act and will have to pay fines ranging from K10,000 to K50,000 for each day during
the legal proceedings. Those found guilty of violating the law must pay the fine, cease construction
and face being sentenced to a jail term of up to one year. Prior to enactment of the City Development
Act, the fine was fixed at K10,000 per day. Contractors were able to pay a fine of K300,000 per
month and complete construction without seeking authorization. After construction was completed,
land owners and tenants with informal deeds had to face the consequences, leading to disputes.
Source: Myanmar Business Today (15th September)
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