Myanmar’s Yangon regional government is seeking to ease the price-hike crisis with land plots in industrial zones in the former capital which has skyrocketed since 2011.
Measures are being sought to bring down the price to enable establishment of factories on the land plots in light of Myanmar’s economic reform.
Currently, one acre (0.405 hectare) of land plot in Yangon’s biggest industrial zone of Hlaingtharya is priced at 250 million Kyats to 400 million Kyats (about 300,000 U.S. dollars to 476,000 U.S. dollars), while in the Thilawa zone one acre is at 190 million Kyats (226,000 U.S. dollars).
Entrepreneurs said the current excessively high land prices could affect foreign investment, suggesting that unless reclamation of new land plots, the price can be out of control.
As the land prices go up so do the condominium buildings.
People have been investing mainly in the land and apartment in the country, an economist U Ko Ko Htwe said, adding that property- business became developed and the prices rose about ten times within a decade.
High land price in industrial zones interferes with local and foreign entrepreneurs.
To attract investors, land prices should be controlled systematically, providing all of the required infrastructures, he said.
The price hike is not only happening in Yangon region but also in some areas deemed as being able to make good business covering the coastal region and region where hotel business can be expanded.
A study reveals that while some people bought land plot for carrying out actual undertakings, some others do nothing on it but keep it at hand and trade it when the price gets higher, resulting in high prices.
There are also some dozens of land plots owned by a single person, constituting monopoly of the land market.
As the real estate price is going up ceaselessly, people at basic level found it is not easy to possess a private apartment. Likewise, with the ascending land price, the investment capital for investors increases correspondingly.
Recently, the Ministry at the President’s Office is introducing a measure to establish land price control committees involving the government and the private sectors to deal with the issue in a transparent manner and such committees will be first set up in Yangon and Mandalay.
Economic experts said only the application of correct taxation system can bring down the price.
In August, Myanmar re-adjusted its tax rate on real estate deal by re-increasing the rate by 22 percent in terms of value on the deal after a provisional measure of reducing such tax had remained unchanged for four years since August 2007.
Buyer who fails to declare one’s source of income for the purchase is now re-set to pay 37 percent tax over the deal against only 15 percent introduced in 2007 when it was once reduced from a heavy 50 percent prescribed in 1976.
The re-increase of the tax rate is said to burden the buyer, estimating that once the purchasing power drops, the real estate prices could fall slightly according to real estate service agencies.
Estate dealers said they are monitoring closely the development for at least six months to see if there is probable resumption of the business to normal.