Special report

Rents soar in big rush to catch up with own future

Tun Tun Naing, 26, an authorised dealer for brands like Samsung, Huawei and Sony, is riding the wave of mobile phone services that has transformed life in Myanmar since the transition from decades of military dictatorship.

But it comes with a price. "Four years ago, I used to pay four lakh kyats (S$430) a month," he says, sitting on the steps of his mobile phone accessories store in Latha Street in downtown Yangon.

"Today, I pay 20 lakh. And it's for a shop with a 15-foot front," he adds, gesturing at his doorway.

Rents in Yangon skyrocketed after the economy opened up in 2011. Office and residential rentals are now about three times those of Bangkok, and similar to Singapore's. 

Colliers International says citywide monthly average office rental rates ended 2014 at US$69.17 (S$96.82) per square metre. But the forecast "remains upward in 2015, albeit at a more modest rate than witnessed in the past two years", it says on its website. "The lack of international-standard office buildings will keep premium rental rates relatively stable."

Myanmar's Ministry of Construction wants to build more than one million houses in the next 20 years to meet demand for residential real estate. Developers aim to complete more than 10,000 high-end apartments before the end of 2017.

Yangon is a city that almost seems to have been old to begin with. The Chilean poet and Nobel prize winner Pablo Neruda, who lived there in 1927-28 as a junior foreign service official, famously wrote in Rangoon 1927, that he had come too late. "Everything was already there," he wrote, "a city of blood, dreams and gold, a river that flowed from the savage jungle into the stifling city."

At the crossroads of the Second World War, plunged into civil war soon after independence in 1948, and then submerged in decades of stifling socialism and military rule, the city is now working overtime to catch up with its own future.

The construction industry registered a compound annual growth rate of 14.52 per cent from 2009 to 2013. Myanmar's Ministry of Construction wants to build more than one million houses in the next 20 years to meet demand for residential real estate. Developers aim to complete more than 10,000 high-end apartments before the end of 2017.

With the amount of office and residential space available set to jump through 2016, the market will lose steam, but prices are likely to only ease a little, analysts say.

 

But as the city reinvents itself, what could be lost is the sense of community that is evident in the dense mixed neighbourhoods, where life spills out onto the sidewalk and neighbours know each other, says historian and author Dr Thant Myint-U. The question, he says, is whether regulation can preserve that sense of community.

A few blocks from KFC's first branch in Yangon, where outside, local men play chess in that spirit of community, Mr G. S. Sharma sits in his spartan office on the ground floor of the building he was born in, contemplating the changes around him.

The trendy restaurants may be irrelevant to him, the businessman says - they're for the younger generation and foreigners - but they're still welcome. "There is no nostalgia," says the 76-year-old, shaking his head. "The 60s was the hardest time. Now, change must come."

A version of this article appeared in the print edition of The Straits Times on September 22, 2015, with the headline 'Rents soar in big rush to catch up with own future'. Print Edition | Subscribe