In the unreliable and volatile market in Burma, many investors put all their money in the real estate market.

 
“The real estate market is the best option for profit making under current market conditions but people can buy real estate only when they have enough disposable money. The real estate investment is better than the car and bullion market for profit-making,” said a real estate business owner in Rangoon.
 
The price of real estate in the six Rangoon downtown townships has reached their height with both businessmen and construction companies eyeing the properties.
 
Properties on Anawrahta Road, Mahabandoola Road and Sule Pagoda Road can fetch the highest prices.
 
“The properties in Sule Pagoda Road and Anawrahta Road can fetch up to 1 million kyat (US$ 1,245) a square foot. But the actual price when the final deal is struck is around 700,000 kyat (US$ 872). So the actual price is in the hands of the buyers and sellers. Sometimes the buyers give a calling price when they like the property. So there is no stable and reliable market price for these properties,” a broker in Minglataungnyunt Township said.
 
The busiest six townships in downtown Rangoon are Kyauktada, Latha, Pazundaung, Lanmadaw, Pabedan and Botataung but the price of real estate in the townships is slightly different from place to place and so is demand by buyers. Kyauktada and Pabedan have a bigger demand and the prices are highest. The ground floors of some flats in the two townships are attractive for businesses and shops and hard to come by.
 
The prices for ground floor flats rose five fold in the last five years with the current price of 30’x60’ flats between 250-400 million kyat (US$ 312,500 to 500,000) but there are few sellers for these flats. Properties in Pyi Road and Kabaraye Pagoda Road are also rising to 300,000 to 500,000 kyat per square foot (US$ 375 to 625). Most of the highest priced transactions were made in these locations.
 
However, the property market became sluggish starting in early June because of the expiration of the Property Tax in August. The Property Tax Law applies for both buyers and sellers.
 
Before 2007, 50 per cent of a property’s price was levied as profit tax and then after 2007, it was changed to 12 per cent for above 5 billion kyat (US$ 6.25 million at the current exchange rate) of property price and 15 per cent for below 5 billion kyat of the property price, the Internal Revenue Department announced.
 
Under the protection of this law, the money launderers entered the real estate market and bought many high-price properties.
 
“Since 2008, the price of real estate has skyrocketed. After the gem emporium, the Chinese-Shan bought properties by paying the calling prices without bargaining if they liked them. Then the calling prices became market prices later,” a seasoned real estate broker said.
 
Land prices for big plot along Pyi Road and Kabaraye Pagoda Road rose to 500,000 kyat (US$ 625) per square foot from 100,000 kyat (US$ 125). The plots on the lanes along these two roads can fetch half of that price.

“A Chinese-Shan bought many plots near the former gem museum in Mayangon Township and then many people also bought these plots which made the prices of the properties double in a short time span. Many bought the properties by paying the calling prices and then they became the market price which fuelled rising prices for all properties,” said a retired government in Mayangon Township.
 
Similarly, some plots on the outskirts of Rangoon such as 40’x60’ plots in North Dagon Township are also in high demand and they can fetch good prices, said local residents said. Previously, the plots along the Panglong Road in South Okkalapa Township near Bailey Bridge could sell for 40 million kyat but can now go for over 100 million kyat, said brokers.
 
“The prices rose due to good communication. Most of the main roads are occupied by businesses. Now you cannot buy these plots. There are no sellers for these plots. They are full of shops and businesses along this road from Bailey Bridge to the junction of the Township Administrative Office,” a real estate firm owner said.
 
People are in a "wait-and-see" mode now on the change of the Property Tax law, which will expire soon. It could be either renewed or terminated. Some worry about the collapse of the property market as many people can enter the market now with the low tax rate of 15 per cent. Some speculate that the rate will be increased by 10 per cent.
 
Some assume the property market bubble will burst soon but a noted construction business firm owner said that the current prices for real estate in Burma are not as high as property market prices in most Asean countries, such as Thailand, Cambodia, Vietnam and Singapore.
 
“The property price in downtown Singapore is much higher than in Rangoon. In Vietnam too, the price is nearly US$ 20,000 for each square meter (3.3 square feet). In Rangoon, the highest price is just around US$ 1,000,” he said.

The government has sold many state-owned properties by auction and tender but it made no significant impact in the market because they were at high prices. The Padomma Theatre owned by the Ministry of Culture in Sanchuang Township was sold at 500 billion kyat (US$ 625 million at the current exchange rate) by tender in February this year.

Observers said that the two successful bidders for the plot have had difficulty in paying the bidding price and they are considering surrendering the plot to the government.