The Myanmar government should not attempt to intervene or rein in the current boom in real estate but should instead allow it to fluctuate according to market demand, says Prof. Aung Tun Thet, noted economist, member of the State Socio-Economic Development Advisory Council and advisor to the United Nations Development Programme.
The price of property and land in Yangon is currently the highest in Southeast Asia—recovering after decades of stagnation under military rule—with prices increasing threefold in two years.
Over the past year an influx of foreigners into the former capital has spurred the rise in prices. However, many analysts are now warning that the soaring cost of real estate is preventing investors from moving in. Some have advised the government to rein in or intervene to curtail the price of land.
President’s Office Minister Soe Thein made such a remark in his capacity as the then Chairman of the Investment Commission in 2012, saying that the government should intervene in this market with clear policy guidelines.
According to Dr. Aung Tun Thet: “The rising cost of land is indeed a hindrance to the economic development of the city and the country at large. But it is not due to sellers’ greed—it is simply the trend of demand-pull market economics.
“We must accept this,” he said. “I worry that the government will try to meddle with the market. Rather than controlling the market, infrastructure development should be undertaken and waste land should be provided to real and potential investors.”
The well-known Myanmar economist made the comments at a talk show hosted by the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) held at its office in Yangon on Tuesday.
Experts have suggested that a main cause of the rise in prices is an increase in the resale of waste and virgin land to buyers who do not develop it or invest in much-needed projects such as the manufacturing sector.
On that issue, Soe Thein said at a press briefing in February that the government will take steps to ensure real estate sales go only to actual investors and active businessmen in future.
UMFCCI Vice-Chairman Dr. Myo Thet said, “The rising cost of land and real estate is a challenge to the development and progress of the country. We need a balancing act, but at the same time, cannot intervene to control the market.”
An official from the Myanmar Real Estate Brokers Association said that, as far as he can see, the current trend of rising real estate prices will continue.
Previously, Aung Tun Thet said, speculators watched the real estate, gold and motor vehicle markets. However, nowadays only the real estate market is left open to such speculators.
“When we have a stock exchange in our country no one will speculate in only the real estate market,” he said. “Now speculators have no alternatives. In time, the price of land and real estate may fall—but the market won’t.”
