Recently, I attended the Myanmar Urban Development Conference 2013 in Yangon, Myanmar. I will cover topics discussed at the conference in the Publisher’s Note of the July/August issue of The Institutional Real Estate Letter – Asia Pacific, but I wanted to share with you some of the impressions and observations I’ve got from visiting Myanmar, the country that just started opening up after more than 50 years of the military rule.
First observation: no service. I travel a lot in Asia, and the first thing I do after getting off the plane is to turn on my iPhone. In all countries in Asia after a click I get a message: “Welcome to Telecom Singapore/Hong Kong/Malaysia/China/etc.,” depending on the country of my destination. This time, there was no familiar click, and the message at the left top corner of the screen read “No Service.” The phone was dead, and I had an uneasy feeling of being cut off from the rest of the world.
Of course, people in Myanmar use cell phones, and later in the city I saw many young people using even iPhone 5 models. But AT&T, the mobile phone service provider that my company uses, doesn’t not have any connections with the local telecom companies, and you have to make local arrangements to be able to use cell phone services in Myanmar. Many U.S. companies cannot operate in Myanmar yet due to sanctions, and I had to carry a box with our publications to the conference because we could not ship them via FedEx or any other carrier the way we do in other Asian countries.
Second observation: no motorbikes. Motorbikes, the plague of most cities in developing Asia, are absent from Yangon streets. While studying and traveling in Asia in my student days, I remember seeing entire families of four and sometimes five (that is two parents plus kids) traveling in clouds of smoke on a single motorbike in Taipei and other Asian cities. I saw no such sight in Yangon. I asked around and found out that the government banned motorbikes in Yangon. I’m not sure what the effect on the economy was, but the city looked much prettier and cleaner. There were traffic jams, for sure, but they were mild, so to speak — nothing like the ones you have in Beijing or Bangkok.
People were very friendly and, surprisingly, even taxi drivers spoke decent English. I would like to write more about the people of Myanmar, as I was really impressed with their friendliness and willingness to share their culture and religion with foreigners. Myanmar is predominantly Buddhist, and you can see pagodas, monasteries, and monks and nuns everywhere.
Now, on to the real estate and infrastructure. Myanmar needs both in a big way, and the government is making plans. Some of the foreign engineering and construction companies made their way into Myanmar ,and several asset management firms made deals to buy properties for their portfolios. Can foreign investors make money in Myanmar the way they have made it in other Asian countries? That is not an easy question to answer, and it depends on many factors. But to give you a quick feel, the land prices soared and doubled and tripled in many places after Hillary Clinton’s visit there about a year and a half ago. And this is without any new major construction projects being launched in Yangon, just on the expectations only.
The government officials welcomed foreign investors, but at the conference, some of them admitted that there is no clarity as to which government department is responsible for what, and permits are delayed due to departmental rivalry. Foreigners cannot own land; they only can lease it for 50 years with two automatic extensions of 10 years each, and they need a local partner. The middle class is still poor, and affordability will be a bigger issue than in China and other Asian countries. So it is not an easy question to give a quick answer to.
In a way, and this is an impression from only one conference, the situation in Myanmar reminded me of India, where foreign investors’ enthusiasm petered out after years of waiting and delays. Local developers made money in India, for sure, but do you know of many foreign investors who are happy with their returns in India?
It is early days in Myanmar and way too early to make any conclusions. I am personally very hopeful for this country with very friendly and gentle people, and I hope that it will keep on opening more and more.
If you have traveled to Myanmar or have questions or opinions about the real estate opportunities there, please post in the comments.
Alex Eidlin is managing director – Asia Pacific with Institutional Real Estate, Inc.
