Tuesday 19 November 2013

Foreign apartment ownership schedule in condominium law

By providing for foreign ownership of condominium apartments, the draft condominium law could help steer the market toward a higher standard of construction and property development, industry experts said last week.

Foreigners will be eligible to own apartments on the 6th floor or above of condominiums, according to an official draft of the Condominium Law published on November 10 in The New Light of Myanmar.

The full text of the draft law also stipulates that foreigners will be able to buy up to a maximum of 40 percent of apartments above the sixth floor in condominium apartments.

Capital Development general manager U Soe Thiha Hlaing told The Myanmar Times that the property market would become more vibrant and would be bolstered by the provision to allow foreign ownership.

“This would in turn encourage more foreign investment in the real estate market in Myanmar,” said U Soe Thiha Hlaing. “Evidently, a healthy and competitive industry with quality standards on the rise would eventually benefit the Myanmar home owners and buyers.

“There is already a fair bit of interest in the Myanmar property market from foreigners – particularly from neighbouring Asian countries – and this law to allow foreign ownership would now pave the way to inject much-needed funds into the industry.”

Scipio Services managing director Brett Miller likewise said there was already intense interest from foreign investors wanting to buy into the condominium market in Myanmar.

“From today, we have a growing list of 369 interested foreign parties that will be notified of projects as they’re proposed and approved, so they can consider pre-sale units for investment purposes,” Mr Miller said, adding that his firm believed that “this modest list is just the tip of the iceberg when it comes to foreign interest”.

The provision for non-Myanmar citizen ownership of condominium apartments is the first time the government has scheduled Myanmar property as available for 100pc foreign ownership.

“It’s our opinion that foreign ownership will positively impact the real estate market because developers will invest in quality construction, facilities and management of their projects to compete for foreign buyers,” Mr Miller said.

Pronto Real Estate managing director U Robin Saw Naing agreed that providing for foreign ownership of condominiums would help with increasing the standard of future apartment blocks being constructed, but that it would take time to see real change in available residential housing.

“Some foreigners who represent big companies are interested in buying condos instead of paying this

crazy rent, but the quality and the price [of condo apartments] are not really welcoming,” U Robin Saw Naing said. “The quality ones are around a half million USD per unit, which are not ready yet and still under construction. In the long run, [foreign ownership] will affect the rental market, but not yet.”

The draft condominium law makes no building code or construction standards mandatory for condominium developers, nor does it specify parking allowances, lift, or public space or service requirements for residents.

Without a building code or other regulatory framework in place, the quality of future apartment blocks would be steered largely by market demand.

The Condominium Law bill was first introduced to the Pyithu Hluttaw in November 2012. Property market observers at the time said they hoped the law would help stabilise skyrocketing rental and sales prices for condominium apartments – some of which had more than trebled year on year.

According to the draft law text, condominiums must be constructed on blocks of land zoned for residential use and not smaller than 1 acre. Smaller plots require the prior express approval of the Ministry of Construction before building work for a condominium can begin.

Scipio Service’s Mr Miller said the 1-acre stipulation had the potential to greatly impact the market for construction of new condominiums, but a lot hinged on the nature of the Ministry of Construction approval process for building on smaller blocks.

“If the approval process is complex, ambiguous or lengthy, then foreign developers will try to avoid the additional approval process altogether as they try to announce quickly to capture the market,” he said.

“Plots of 1 acre along a main road in a residential zoned area are difficult to find, meaning the qualifying plots will be held by few landowners and will command great value in the market.”

The law also schedules the formation and activities of building management committees to oversee the management and maintenance of condominiums. If a completed condominium is more than 50pc occupied, such a management committee will be constituted by a residents’ caucus.

In the event that a condominium is less than half occupied, an interim caretaker committee will be assigned to the building from Department of Human Settlement staff.

The draft law does not specify heights or sizes of condominium buildings or individual apartments. The Myanmar Times has previously reported that industry experts had warned against introducing too many restrictions in the Condominium Law for fear it would deter investors.

Real estate agents have attributed the rise in property rental prices for condominiums to the huge influx of foreigners.

source: The Myanmar Times

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