Skyrocketing real estate prices in Yangon have resulted from a mis-match between supply and demand. Land prices in Yangon reached $1,500 per square foot in downtown Kyauktada township which is near Sule Pagoda. In some townships prices have increased ten- fold since 2007. The highest value currently in Yangon is in Bahan Township (also known as Golden Valley), Other expensive townships are Dagon, Mayangone, Kamaryut, Hlaing and Sanchaung. Along with land prices rising, the rental rates for commercial office space has also risen particularly in prime office properties like Sakura Tower in Kyauktada township. Rates there are currently $85 to $90 per square meter per month….. more than three times what a company would pay for prime space in Bangkok. A lot of foreign companies have now chosen to leave Sakura and look for more reasonable rent elsewhere. In Yangon the most desirable office buildings in addition to Sakura are Union Business Center and Center Point Tower. Residential rents are also increasing along with office rents.
What can be done? Most measures to hold the market in check have not been successful. The government tried earlier to raise the transaction tax and also placing part of the burden for paying it on the seller and not just the buyer. They have also enacted a standardized value system to determine land taxes by using a street-by-street approach as used in many other areas of the world. The bottom line is: prices and rents will not diminish until more supply is added in order to more closely correlate with demand. Landlords have little incentive to not raise rents if they have customers willing to pay higher prices due to scarcity. And office towers and condominium buildings take time to build.
Update: May 25, 2014
It is reported that UNESCO, the UN organization for children, recently rented a compound in Bahan township for close to $90,000 per month from a general under the previous military junta. UNESCO had to move out of the Traders Hotel which changed recently to become the Shangri La Hotel.