Govt urged to better regulate the market

Govt urged to better regulate the market

By Htar Htar Khin   |   Sunday, 04 August 2013

Improved regulation will further the booming Myanmar property market, though costly land is cutting into potential development, according to speakers at a property summit hosted by Kelvin Chia Yangon last week.

Pedestrians pass an advertisement for a new housing project in Yangon. Photo: Staff

Rapidly increasing land prices are slowing project development, leaving a role for government action to cool speculative activities, said Ronald Lee, Capital Properties project director.

"Current land prices are on the verge of being uneconomical for most business activities," he said. "Prices are fuelled largely by speculative activities and the lack of alternative investment opportunities."

Capital Properties has built projects such as North Point and Ocean Pazauntaung, as well as the City Mart retail chain, but Mr Lee said a spate a speculation was occurring with purchasers having no intention of developing properties, raising land prices.

The government ought to encourage actual development by intervening to cool land prices, he said.

Government policy plays a central role in determining Myanmar's land use, said Cheah Swee Gim, director of Kelvin Chia Yangon.

"Myanmar has massive land plots and the largest are in some of the untapped regions," she said.

It was crucial to establish a strong regulatory framework to allow project development to proceed, she said. This included more detailed rules laying out land purposes, such as creating a law specifically for farmland.

Land valuation requires appreciation of the zoning regulations for the property, specifically what sort of commercial purpose the land can be put to. The length the property can be owned for ought to also be considered, as leases for land approved by the Myanmar Investment Commission (MIC) for development are restricted to 30-90 years.

With much of Mandalay and Yangon's land being privately held, it is no surprise that development activities have increased rapidly, speakers said.

A number of approvals are required to begin construction on projects, and any property development requires a considerable amount of work to gain the green light from the MIC.

"An MIC permit is always required for a land-related project in Myanmar," Cheah Swee Gim said.

Some regulations are moving forward, but some of them might restrict the market, she added.

A draft condominium law includes provisions that will restrict foreigners to owning 40 percent of the units in particular building.

Other regulatory efforts include the development of a national building code.

Increased urbanisation means structural safety of buildings is becoming more important, said Myanmar National Building Code Project chairman U Than Myint.

"Building regulations are being created in Nay Pyi Taw, Yangon and Mandalay," he said. Officials are constantly on the lookout to ensure safety of buildings, and a number of local governments can be expected to enact separate requirements in certain places.

Yangon codes also required that buildings in the area of Shwedagon Pagoda must not exceed 190 feet above sea level, while commercial buildings outside of the area are restricted to 417 feet above sea level.

The potential for earthquake damage is a strong consideration in developing the building code, as a recent earthquake in Taung Twin Gyi had destroyed many of the poorly constructed homes in the area, U Than Myint said.

"To mitigate the natural hazardous risk, we need to construct projects according to standardised buildings controls and codes," he added.

Plans to enact the building code are moving ahead, with the committee currently discussing the planned regulations with experts, and anticipating the final version being completed by the end of next year.

Developers should take the pending building code seriously, as following its guidelines is crucial to projects' eventual success, speakers said.

Source: http://www.news.myanmaronlinecentre.com/2013/08/04/govt-urged-to-better-regulate-the-market/