Property is not for Investment

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(The opinions expressed in this article are those of the author.)

Since 2012 property prices in Myanmar has skyrocketed beyond the reaches of ordinary families. It has been known widely domestically as well as internationally that one square foot of prime land costs the same as or even more than that of in New York. It is very bad news for most of ordinary hardworking simple, peace loving Myanmar families.  Cost of a plot in sub-urban area is now more than several hundred million Kyats and most families do not afford to buy. Their average income is 1.2 to 2.4 million Kyats per year. Many earn even less than that salary or income bracket.  Many families have to work very hard to make ends meet and to solve daily living, educational, health and other social responsibilities.
Why have the land, flats, and other residential property prices gone up months after months since 2012. There are many schools of thoughts and opinions regarding the causes and reason. However, it is apparent that there are several or many reasons. Whatever are the causes and/or the reasons for the skyrocketing prices of properties in Myanmar, it is very crucial for the Government to cool down the prices by introducing various measures.  Price increases does not confine only  to the big cities residential areas but other commercial lands such as industrial estate, agriculture, livestock, plantation and land for the special economic zones.
Many potential foreign investors from many countries around the world have flocked into Myanmar since the promulgation of Foreign Investment Law in 2012.  Many have left with disappointment on the incredibly high land prices and confusion related to land disputes. As a result Myanmar has lost initial opportunities for floods of investment as well as technology transfer. One of the high profile examples is Samsung’s thwarted plan for building modern mobile phone handsets arguably due to very expensive land and rental costs. They are said to have moved the investment to Vietnam instead.
One of the widely known causes of exponential price increase is speculation. In other words rich and well connected people have bought lands, flats, condominium and other properties to make quick profit in future selling. Some areas call it “Investment”. But it is very bad investment for the majority of the national people. While it is understandable that people have rights to make business investments to increase their wealth, there should be control measure by the Government since land speculation is hindering the economic progress, social development, employment and most importantly severely affecting the efforts for the reduction of poverty in our country. Due to high cost of residential properties, poor people cannot afford for a decent homes but to become illegal dwellers by trespassing private or public properties. We are almost daily witnessing in the media the clashes between the authorities and illegal dwellers.
The answers will of course lie in the authority of the Government. Several measure to size the fly away property prices have been introduced by the Government notably by taxation. However, it is very important to stop by introducing laws & regulations to discourage the rich people to invest in the property sector. On the other hand rich people will have alternate opportunities to invest their money in other productive sectors {beneficial to the people of Myanmar} including stock exchanges.

[quote font=”0″]The author of this article is an engineer living in Yangon.[/quote]

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