Yangon Real Estate Review Q Sample pages

Transcription

1 Yangon Real Estate Review Q Sample pages

2 Introduction and methodology This report is based on research carried out in Yangon in 2014, as well as the longerterm market understanding of our staff. In addition to conducting interviews with developers, contractors, brokers, government and local authority officials, as well as other relevant businesses and organisations, we conducted numerous site visits to the projects mentioned in this report. It is aimed at a wide range of readers, including developers, investors, funds and consultants, as well as construction companies, architects and building materials suppliers seeking to do business in the sector. The report is updated quarterly: the next issue will be published in January 2015 with updated information across all sections. While we have made every effort to ensure that the information in the report was accurate at the time of research, the real estate market in Yangon is in flux. It is therefore inevitable that some information in this report may change rapidly. Pricing figures should be seen as guidelines only, and the cost of properties in a certain zone may be significantly higher or lower than the averages we use, given the immature structure of the Yangon real estate market. The report cannot and does not intend to provide a comprehensive picture of Myanmar s economic, legal, political and fiscal environment. Although these are covered in the report, the aim of this is to place the real estate sector in the wider context of the economy, the business environment and relevant legal considerations. As legislation in Myanmar can be subject to unforeseen change, we always recommend that companies seek specialist advice from a qualified local law firm where required. About Frontier Frontier is a business research firm covering the world s more economically exciting markets. We are based in London and in 2014 established an office in Myanmar, where we provide a range of custom and subscription-based business research services. In the real estate sector we undertake market and feasibility studies for residential, office and retail property, as well as hotels. Our team of local and international staff offer a range of expertise, including direct experience of working for local real estate developers in Yangon. The Myanmar Real Estate and Construction Monitor is Frontier s subscription service, an essential resource for developers, investors, contractors, architects, project management and other firms operating in the sector. It features news analysis, tenders, company profiles, a Yangon project tracker, data and copies of relevant legislation. Subscribers also receive four copies per year of our Yangon Real Estate Review, published quarterly. To discuss how we can help your business in Myanmar, please get in touch. realestate.frontiermyanmar.com Office 12, Building 27, Shwe Ohn Pin Housing, Yan Shin Road, Yankin, Yangon Michael Guarino, Commercial Director michael.guarino@frontiermyanmar.com Clare Hammond, Managing Editor clare.hammond@frontiermyanmar.com Myo Zaw Hein, Research Analyst myo.hein@frontiermyanmar.com

3 YANGON REAL ESTATE REVIEW, Q TABLE OF CONTENTS EXECUTIVE SUMMARY SECTION A KEY DEVELOPMENTS IN Q New entrants Companies and projects Transport and infrastructure Government and legislation New data and statistics releases SECTION B YANGON AND MYANMAR Macroeconomic and business environment... Executive summary Overview Historical development Population GDP growth and key sectors External trade Inflation Currency and monetary policy Foreign investment Legal and investment framework Stamp Act... Foreign Investment Law (FIL)... Condominium Law... Special Economic Zones (SEZ) Law Build-Operate-Transfer (BOT) agreements Zoning and planning Sales transaction process Rental contracts Real estate financing Yangon Overview and role of Yangon in national economy Economic drivers Geography and layout Planning and zoning Demographics Utilities and infrastructure Transportation District profiles and mapping Downtown-CBD Bahan Ahlone Kamayut Mayangone Sanchaung Hlaing Yankin Dagon Mingala Taung Nyunt Tamwe Introduction Types of immovable property in Myanmar Key laws and acts Transfer of Property Act... Transfer of Immovable Property Restriction Act...

4 SECTION C MARKET ANALYSIS Residential property Executive summary Residential stock Recent supply trends Demand drivers Pricing Rental pricing for condominiums Officially appraised values Future supply pipeline Government housing projects Profiles of government housing projects Outlook Office Executive summary Background Recent trends Current office stock Demand drivers Key tenant types Future supply Outlook SECTION D PROJECT PROFILES Profiles of major real estate projects Residence The Atrium Condominium AWBA Capital City Crystal Executive Condominium Daewoo Amara Lotte Hotel Dagon City Diamond Inya Palace Diamond Valley Rises Golden City Golden Link Condo Grand Myakanthar Condominium HAGL Myanmar Centre Hilltop Vista Condominium Infinity by KHG Inya Lake View Junction City Kantharyar Consortium Project Kabaraye Executive Residence Landmark Development Manawhari Commercial and Residential Complex Mawrawady Condo Merchant Suite Mindhama Residence Phase II Myat Mingalar Naing Group Tower II Northern Inya Residence Novotel Yangon Max Parkside One Paragon Residence Polo Club Residence Project Pioneer Pun Hlaing Lodge...124

5 SECTION D PROJECT PROFILES (CONT D) Pyay Garden Pyay Tower and Residences Riverview Point Royal Sayarsan by Than Htike Lu San Yeik Nyein Condominium Sedona II Yankin Star City Sanchaung Garden Residences State House Hotel (former Police Commissioner s Office) Sule Square Than Lwin Condo The Yar Pyae Condominium Times City Union City Union Financial Centre Vantage Tower Wave Hotel Yangon Business Centre Z Villas Prospective future projects Former Import/Export Department Head Office Former Ministry of Hotels building Former State Defence University Nanthida Port Former Secretariat Building Former Supreme Court Wardan Jetty Botahtaung Port Mindhama Central Business District Yangon Central Rail Station Thilawa Special Economic Zone (SEZ) SECTION E COMPANY PROFILES Developer profiles Adventure Myanmar Tours and Incentives Asia Myanmar Consortium Development (AMCD) Aung Kaung Kyaw (AKK) Group Aung Min Pyae Sone Construction Beaver Group Capital Development Creation Myanmar Dagon Construction Eden Construction Fatherland Construction Ga Mone Pwint Green Vision Htoo Construction Development Jewellery Luck Family Group Keppel Land KMA Construction and Real Estate KT Group Lat War Group Mandalay Golden Wing Construction Marga Global Max Global (Max Myanmar) Motherland Construction Myanmar Seilone Myanmar V-Pile Naing Group Royal Land Construction (Taw Win Myay) Shangri-La Shine Construction Shwe Taung Property Shwe Than Lwin Construction Ta Gaung Bwar Taw Win Family Uniteam Marine Wa Minn Development

6 SECTION E COMPANY PROFILES (CONT D) Yadanar Myaing Yoma Strategic Yuzana Company Zaykabar Newcomers and other larger developers active in Yangon Htike Sin Htun Myat Aung Noble Twin Dragons KHG Development Pyae Soan Win Naing (PSWN) Nay Nann Thukha Uni Global Power Chinsu Myat Su Mon Construction United GP Development CNQC Development MKT Construction CNQC Flying Tiger Engineering Great Master Construction Profiles of key government bodies Directorate of Investment and Company Administration (DICA) Ministry of Construction Ministry of Hotels and Tourism Myanmar Port Authority (MPA) Yangon City Development Committee (YCDC)

7 SAMPLE COMPANY PROFILE Nationality Ownership Capital Development Myanmar One of 13 companies under Capital Diamond Star Group (CDSG) Parent/subsidiaries Affiliated with Capital Automotive, Capital Construction, Capital Life Insurance, Diamond Star, JDS, Myanmar Consumer Enterprise, PAC Link Trading, Premier Coffee, Mawlamyine Cement, Capital Connect, Capital Mobile and Capital Leasing. Year established 1960 Employees 5,500 (CDSG Group) Turnover $380m (group turnover, FY2013) Profit Completed projects Ongoing projects Capital Hypermarket (Yangon) Capital Hypermarket (Nai Pyi Taw) Gems Garden Condominium (Yangon) Capital City (Yangon) CONTACTS AND MANAGEMENT Address No , Sule Pagoda Road, Kyauktada Township, Yangon Website Phone / (+95) Management Ko Ko Gyi (Group Managing Director) Ko Soe Thiha Hlaing (Managing Director Capital Development) Capital Diamond Star Group was set up in Myanmar in the 1960s as a trading company. It now has 13 operating entities across sectors including food, retail, real estate, pharmaceutical, financial services, automotive, telecommunication and infrastructure. Its initial focus was food, but the company entered the retail market in Its flagship real estate project, mixed-use development Capital City, was launched in The project is progressing as planned. The first phase, Gems Garden Condominium was 45% complete and 75% sold out as of end-september 2014 Construction on the second phase is expected to start in Capital Development, along with other CDSG subsidiaries Capital Construction and Capital Leasing, are also building projects such as jetties and flyovers, as well as providing leased equipment to other projects across the country. In August 2014 the company won a tender to build a flyover at Myaynigone junction, ahead of Htoo Construction Development, Myanmar V-pile, Crown Advance and Dagon International. The Yangon Regional Government will spend $17.3m on the flyover. 141

8 SAMPLE PROJECT PROFILE Sanchaung Garden Residence Location Developer Sanchaung Street, branch from Pyay Road between Dagon Center and City Mart, Sanchaung township, Shin Saw Pu district, near Padonmar Sanchaung Garden Development Group, affiliated with Wa Minn Contractors/consultants Space Marix (Vietnam) - Architect AEDAS (Singapore) - Master planning Estimated completion December 2016 Status Q Announced value Tender terms Freehold land Duration COMPONENTS Residential Office Retail Supporting Hotel Site size Five buildings, each 12.5 floors, with a total of 254 units N/A N/A Gyms, restaurant, swimming pool, parking space One hotel, 12.5 storeys, 130 rooms 1.95 acres Construction is due to begin in December 2014 with completion slated for December Sales prices are approximately $ per sq ft, with terms involving an initial deposit of $1,858 followed by monthly instalments over 30 months. According to the company, over 136 units in total had been sold as of late September 2014.

9 1 KEY DEVELOPMENTS IN Q SAMPLE PAGE 1.1 NEW ENTRANTS Myanmar contractor Home Construction has signed an MOU to help Thailand s D&W (Asia) expand into Myanmar, primarily in the high-rise market. Oxley Myanmar, the subsidiary of Singapore s Oxley Holdings, will develop its debut project, a 20-storey mixed-use development in Yangon, called Min Residence. Indonesian contractor Wijaya Karya (Wika) has signed a $125m contract to build a mixed-use development in Yangon for Noble Twin Dragons, a Singapore-incorporated developer. The Pyay Tower and Residences will cost $270m and will feature one commercial and twin residential towers. The project is a Myanmar debut for both companies. Malaysian listed company Ho Hup Group has entered into a joint venture with Myanmar s Zaykabar Company, though its 70% owned subsidiary, Ho Hup Myanmar, to develop a luxury villa project in Yangon. The $200m project will be called Z Villas and will comprise 191 villa and bungalow units in Mingalardon Garden City a largescale Zaykabar housing project to the north of Yangon. Philippines property company Ayala Land announced plans to launch its debut project in Myanmar a mixed use development, though a joint venture with a local company. No further details are yet available. Thailand s Buritara Development Company is negotiating with a Japanese property firm to develop a condominium in Yangon. It aims to finalise the deal by mid French hotel group Accor has plans to boost its Myanmar portfolio to a total of nine hotels, including three budget properties under the Ibis brand, two of which will be in Yangon and one in Bagan. These will be developed by Myanmar Golden Star Group. In addition, the company has partnered with Max Myanmar Group to develop Novotel Yangon Max, which is due to open in early December, as well as hotels in Mandalay and Nay Pyi Taw. Thai hotelier Dusit International announced plans to develop a hotel in Bagan as well as an upscale residential project in Yangon and several other resorts across Myanmar. The Yangon project will be developed in cooperation with a Japanese firm. Swiss luxury hotel firm Kempinski will manage a property in downtown Yangon which is being developed by Flying Tiger Engineering, in the former small claims court building on Strand Road. It plans to open under the name Kempinski Yangon in 2017 and will be managed through a joint venture with Jewellery Luck Family (JLF) Group. The project has been opposed by local lawyers who believe the renovation is inappropriate, given the history of the building. Kempinski will also open a Nay Pyi Taw hotel in November in collaboration with JLF and Kanbawza Group. The Ministry of Industry has entered into joint ventures to expand its three stateowned cement plants, which are run by No. (3) Heavy Industrial Enterprise. The Thayat factory in Magway region will be developed by Myanmar Jidong Cement. The Kyauk Se factory in Mandalay region will be developed by Myanmar contractor Original Group and the Kyan Khin factory in Irrawaddy region will be upgraded in a joint venture between Myint Industry and an unnamed Chinese firm. French industrial company Lafarge has started operating a cement factory in Myanmar through local subsidiary Thilawa Cement & Building Materials (TCBM). At full capacity the factory can produce 10,000 bags of cement a day. Cement giant Semen Indonesia (SMGR) will postpone its expansion into Myanmar until next year due to delays in negotiations with its local partner. The company has budgeted $300m for its Myanmar expansion project. Construction work has begun on Siam Cement Group (SCG) s $400m debut Myanmar cement plant. The Thai firm is building its plant in Mawlamyine, and expects it to be operational in mid-2016.

10 3 RESIDENTIAL MARKET SAMPLE PAGE EXECUTIVE SUMMARY A combination of rapid population growth, urbanisation, rising incomes, domestic investment and the need to replace existing housing stock continues to create strong fundamentals for residential property in Yangon. New local and international players continued to enter the market in the third quarter of 2014, highlighting the perceived attractiveness of the sector. 6,000 A rising number of residential units, mainly apartments, are under construction or planning in Yangon. Based on our research, at least 10,000 higher-end apartment units in purpose-built towers or mixed-use developments are expected to be completed before the end of 2017, not including those in several major projects where components have not yet been finalised. A particularly large volume of units is expected to be completed in 2016 (see chart opposite*) 5,000 4,000 3,000 2,000 1, The summer rainy season slowed construction in Q3, although progress has been made on certain projects, including the HAGL Myanmar Centre in Yankin, where Phase I is due for completion in H Several other projects are set for completion in Q and Q Most off-plan higher-end condo units launched in Q are priced in the $ per sq ft range, with some premium projects rising above $350 per sq ft (and higher for villas). Sales on many residential projects, mostly due for completion in 2016 and 2017, were launched in Q with developers claiming strong take-up rates so far. Concerns are rising over affordability and market size for higher-end projects, particularly as foreign nationals remain theoretically prevented from buying property in Myanmar and the availability of mortgage financing is extremely low. The government and local authorities have pledged greater focus on much-needed affordable housing. However, high land and construction costs make it difficult for private-sector companies to generate profits from this segment of the market. Around 30,000 affordable housing units, built by the public-sector, are meant to completed in Yangon next year. * Figures refer to apartment units in purpose-built towers or mixed-use projects. Large-scale projects where unit numbers have not been announced are not included, meaning that real figures are likely to be Higher (assuming projects are built according to schedule). New residential projects are also being announced on a regular basis in Q3 and Q

11 2 YANGON - DISTRICT PROFILES AND MAPS SAMPLE PAGE 2.8 Downtown Yangon s downtown central business district (CBD) is made up of six townships Lanmadaw, Latha, Pabedan, Kyauktada, Botahtaung and Pazundaung. A majority of the city s colonial-era architecture is in this district, which is also home to a Chinatown and Little India, as well as the YCDC headquarters and the Sule Pagoda. It is the most cosmopolitan area of the city, as well as the busiest and most congested. The area s proximity to the Yangon River ports, along with the presence of several bank headquarters and important government buildings, make it a popular office location and it is set to become the commercial and financial heart of Yangon in the years ahead as older buildings are renovated and reinvigorated. After the government relocated in 2004 to Nay Pyi Taw, many state-sector buildings in the CBD were left empty. Many of these are heritage buildings, which were leased longterm to private companies for redevelopment, but only a few are actively under renovation as of Q3 2014, as prospective developers found themselves facing higher costs and more demanding technology requirements than were initially envisaged. Some of the higher-profile renovation projects, including the former Secretariat building (and the former Supreme Court have prompted opposition from local heritage groups, and developers have been forced to negotiate compromise solutions. Other heritage buildings, such as the former Myanmar Trading Corporation building and the former Myanmar Oil and Gas Enterprise (MOGE) building, both in Pabedan township, as well as the former Ministry of Hotels and Tourism building in Kyauktada township, may be tendered by the Myanmar Investment Commission (MIC). Few sites remain available in the CBD for large-scale development, with the exception of land owned by the government. However, several of Yangon s highest-profile projects are under planning or construction in the area. These include Yoma Strategic s $450m Landmark Development on Bogyoke Aung San Road, which will renovate the Burma Railway Headquarters into a 250-room hotel as well as provide 90 residential units, 68,000 sq m of office across two 21-storey towers, and 37,000 sq m of retail space. Junction City is a 9.3 acre mixed-use project by Shwe Taung Development, due for completion in late Sule Square is a commercial and retail development on Sule Pagoda Road, adjacent to the Shangri-La Hotel, and will comprise a 20-storey tower. Completion of these and other major projects, including Shwe Taung s Union Financial Centre Naing Group s towers I and II, will add large quantities of retail, office, residential and hotel space to the area from However, high-rise projects in downtown Yangon are unlikely to become the norm. Yangon s new zoning rules are expected to restrict building height to four to six floors around the Sule Pagoda and the waterfront. Buildings in the eastern and western parts of the district are expected to be limited to 442 feet. Sakura Tower and Centre Point are the main dedicated, multi-tenant office buildings in the CBD, and are largely filled with the representative offices of international companies. Many apartment units in the area have been converted into offices to make up for the lack of commercial supply. The historic Aung San Bogyoke market, popular with tourists, is the single-largest shopping area in the CBD, selling a range of goods from handicrafts, to musical instruments, jewellery, and fashion. Theingyi Market provides wholesale supplies to many shops in Yangon and other regions across Myanmar. Junction Maw Tin (Lanmadaw township), BAK Centre (Botahtaung township) and Ocean Supercentre (Pazundaung township) are the largest modern enclosed centres in the area. Most ground-floor units in Pabedan and Kyauktada townships are used for retail or F&B, with each of the numbered streets dedicated to selling a different product. For example, paper and stationary can be bought on 30th Street, electronics on Bar Street and Pansodan Street, and homewares on Lower Shwedagon Pagoda Road. While a majority of buildings downtown are in dire need of maintenance, and project sites are hard to come by, the areas surrounding the ports represent some of the most high-potential development areas in the city. The port areas in Wardan, Nanthida and Botahtaung are due to be redeveloped under agreements with the respective authorities, although progress has so far been slow.

12 4 YANGON DISTRICT PROFILES AND MAPS SAMPLE PAGE DOWNTOWN CBD Junction City Sule Pagoda Landmark Sule Square Former Secretariat Police Commissioner s Office Trading Corp building MOGE building Ministry of Hotels and Tourism Supreme Court Nanthida Port Botahtaung Port