Rental transactions rise in Yangon, even as larger market stays muted

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Rental transactions rise in Yangon, even as larger market stays muted
The market for rental property, which is the lifeblood of the real estate sector in Yangon, rebounded during first quarter of this year, with more units getting rented out rather than sold.

However, the overall environment of the property market remains muted, industry analysts and leaders said.

Late in April, the rental of apartments in the country’s main city increased, especially those being rented for K500,000  (US$328) per month, according to U Nay Min Thu, managing director of property website iMyanmarHouse.

He, however, noted that demand for apartments and condominiums that cost more than K500,000 a month to rent has remained flat.

U Nay Min Thu said the number of people who want to rent apartments at less than K500,000 a month has risen so the rents have risen on the back of the demand.

“As developers build more medium-cost apartments in recent years and the population has increased, the rental rates have increased,” said U Nay Min Thu

In the current market, demand is highest for apartments that cost K200,000 or less a month to rent, according to the Tun Tauk Real Estate Agency.

Among the townships in Yangon’s downtown area, Sanchaung, Kyeemyindaing and Bahan have the highest rents.

Meanwhile, in the rental market for foreigners, condominiums with rents from K700,000 to K1 million a month are seeing the most demand.

Although transactions tend to slow down during the three months of the Buddhist lent period as most Myanmar people traditionally avoid moving house and trading during the period, the rental market for foreigners is largely unaffected, said U Aung Kyaw Zin of Master Real Estate Co.

Buddhist lent in Myanmar starts on July 16 this year.

As the Buddhist lent nears, property owners are only renting out their units under six-month or one-year contracts, avoiding three-month contract. They are doing so because they want to avoid the difficulties of receiving new tenants during the Buddhist lent, said U Nay Min Thu.

“If houses are rented out under a three-month lease and when the three-month period is complete, owners find it quite difficult to get new tenants during the Buddhist lent. So they prefer six-month contracts, said U Nay Min Thu.

However, only a few owners rent out their properties under three-month contracts, U Aung Kyaw Zin added.

“Brokers find it a little hard to handle three-month contracts too. As for tenants, they also have their difficulty because they have to pay brokers’ fees. As for owners, they don’t want to rent out their property under a three-month contract because they don’t want to repair the units every three months,” he said.

Normally, October and November are the months with most rent transactions, followed by January and February, said U Nay Min Thu.

Compared with last year’s transactions, this year’s property market appears to be softer and the situation looks to be getting more difficult, said Myanmar Real Estate Services Association General Secretary Daw Moh Moh Aung.

“As the market sees fewer transactions each year, I am worried if it would end up like the car market,” she said, referring to a slowdown in vehicle sales.

More has to be done to encourage foreign investments to enter the country and indirectly boost the property market. Taxes need to be cut and red tape with the government departments need to be reduced, Daw Moh Moh Aung said

The Myanmar Real Estate Services Association is trying to propose a law for the sector in 2019, she said, adding that more people are buying homes with loans rather than paying the full price as in the past.