The market for presale housing units has slowed and is affecting new housing developments in Yangon

The market for presale housing units has slowed and is affecting new housing developments, according to industry sources.

“Most building contractors rely on these advance sales to finance their construction. Now that presales are dropping their cash flow is drying up too. Developers are afraid to invest their own money,” said U MaungMaung from ShweGabar Construction Co.

“The housing market in general has cooled down recently. The current favourite is the purchase of land plots,” he added.

U MaungMaung said the Yangon City Development Committee (YCDC) should carefully scrutinise every developer’s financial condition before giving them building permits. If developers start to pull out of under-construction projects consumer confidence will be affected, he said.

Recently announced YCDC regulation requires contractors to have one mandatory electrical transformer with every new construction – which also adds to their expenses. Some developers are also taking a wait-and-see approach ahead of the upcoming November polls.

Vice Chairman of Real Estate Association U ThanOo said that, “Actually it is the market that decides. Dollar rates are fluctuating, construction material costs have gone up. The developers are waiting and watching. As more problems arise in the industry, YCDC had also announced new set of rules and regulations that are adding up more costs.”

Developers who presold housing units before the rise in construction materials prices and new YCDC regulations are finding it hard to keep their projects going as costs have exceeded budget, he added.

U MaungMaung said, “The government should provide basic infrastructure such as water and electricity. It should not be our duty. It just adds to our costs when we have to do all these by ourselves.”

Previously YCDC had no effective laws to regulate new constructions. Actions were taken only when there were violations of YCDC rules and regulations.

During 2013-14 financial year, YCDC granted permits for 172 buildings and in 2014-15 fiscal year YCDC granted 451 building permits to developers, according to official data.

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