RANGOON — The market for high-rise apartments in Rangoon has slowed after the Rangoon Division government suspended construction and failed to clarify its new policies to developers, industry sources have said.
The divisional government and the Yangon City Development Committee (YCDC)—Rangoon’s municipal authority—suspended construction in May on more than 80 high-rises (classified as buildings with nine stories or more) that had not been given final approval before construction began.
“Apartment sales are down the past two months because it is an uncertain time for investors,” said Thant Zin Hein, managing director of Nay Kabar Construction.
Buyers typically put at least 20 percent down while construction is ongoing. While construction is stalled, buyers remain hesitant to invest.
“I can honestly say that this is the worst year for us,” Thant Zin Hein said.
High-rise buildings in Rangoon are often high-end properties, which sell for more than US$85,000.
The divisional government and the YCDC have not clarified their polices, and developers have lost clients’ trust and expect to lose profits as they continue to pay back their bank loans during the suspension period.
“We can’t even offer our rooms at low prices because we don’t know when the government will let us restart construction,” Thant Zin Hein said.
Myo Myint, managing director of MKT Construction Co., was forced to stop construction on five projects in Rangoon.
“Buyers think it is even risky to buy finished apartments in these buildings because there is still not permission from the authorities for anyone to live there,” he said.
He added that the YCDC and an investigative committee had reviewed about 12 buildings under construction so far, but there was no further news.
“Construction will not resume on high-rises until the government sets better policies,” he said.
Developers cite many problems following the crackdown on construction including labor issues, complaints from buyers, delays on repaying bank loans, cash flow problems and lack of business for construction suppliers.
Zaw Zaw, a senior manager at Unity real estate agency said apartment sales had begun cooling down last year, long before the construction halt, when well-known local developer Kyaw Myint faced fraud charges.
“Prices have been dropping, as supply is higher than demand. They are down about 20-25 percent,” he said.
According to the YCDC, the previous Rangoon divisional government and municipal council had given “initial approval” for proposals to build 204 high-rises from 2013 to March 31 this year