At the beginning of last year, nobody could have predicted what would happen to the world throughout the year, 2020. Who could predict that the worldwide coronavirus cases surpass 100 million and the death of 2 million in January, 2021 since the first case was reported in China in December, 2019?

The world economy in 2020 faced probably the worst recession since Great Depression of 1930s. According to the Word Bank, the world average GDP growth of 2020 (estimated) was -4.3% and most of the countries reported negative growth. However, Myanmar was reported to be positive with 1.7%, which is one of the very few exceptional countries with positive growth. The other positive countries in Asia are only China(2%), Vietnam(2.8%), and Bangladesh(2%).

On the other hand, the world economy is forecasted to grow by 4.0% in 2021 and 3.8% in 2022, assuming that vaccines are widely, equally, and efficiently distributed. Myanmar is expected to see 1.7% in 2021 and 8.0% in 2022, whereas 7.9% and 5.2% in China, 6.7% and 6.5% in Vietnam, and 1.6% and 3.4% in Bangladesh.

Why can Myanmar stay in better position within the region even during the difficult situation? It is easy to answer. With 54 million of population with average age of 28, abundant labor force, high literacy rate, and rich natural resources, the country is in full of growth potential and attractive enough for the foreign direct investment(FDI). Despite the COVID-19 situation, the amount of FDI for one year from Oct, 19 to Sep, 20 did reach $5.7 billion, which is only 0.1 billion shorts of its original target.

Key to attract FDI into Myanmar Real Estate Market

It has to be said, however, that real estate market in Myanmar has suffered this year due to current difficult times. Like other countries, the number of tourists from foreign countries have become virtually zero, domestic travels were also heavily restricted, and many foreign businesspersons and residents in Yangon have temporarily left for their home countries. A lot of restaurants and shops were forced to close during the lockdown period. As a result, hospitality industry, high-end residential apartments for expatriates, retail industry such as restaurant and shops are suffering enormous damages.

Like many other countries, everybody in the real estate industry is desperately waiting for our lives to return normal soon. Myanmar's real estate market will definitely recover in a V shape after we overcome Corona pandemic, because Myanmar is one of the most attractive and promising markets in ASEAN region.

On the other hand, real estate investments have been heavily linked with financial products all over the world. Attractiveness of the market and quality of specific development are obviously key to attract the investors. However, whether or not the country or the real estate product meet with global standard is another key factor for qualified investors.

What is the global standard for their decision-making process? It is absolutely a degree of transparency. The more transparent the market, the more investments are induced to the market.

There is a globally acknowledged research report named “Global Real Estate Transparency Index”, conducted by JLL and LaSalle headquartered in Chicago, USA. The 2020 version of the report is performed “based on a combination of quantitative market data and survey results across 99 countries and territories. 210 individual measures are divided into 14 topic areas, which are then grouped and weighted into six broad sub-indices of 1) Performance Measurement 25%, 2) Market Fundamentals 16.5%, 3) Governance of Listed Vehicles 10%, 4) Regulatory and Legal 23.5%, 5) Transaction Process 15%, and 6) Sustainability 10%”

Myanmar was ranked at 72out of 99 countries in the 2020 report. Though Cambodia,  Laos and Brunei are not included in the report, Myanmar is raked at the bottom among other ASEAN countries(Singapre-14, Malaysia-29, Thailand-33, Indonesia-40, Philippines-44, and Vietnam-56).

This fact might make us feel Myanmar is still far behind the global standard. Nevertheless,　it could also make us think that Myanmar has a lot of rooms to improve.

I would repeatedly like to emphasize that the growing potential of Myanmar is more enormous than other neighboring countries and I believe that the transparency ranking of Myanmar will be higher in the JLL’s 2021 report.

I would finally like to assure you that I, as a valuer, would be able to provide with more reliable valuation services in Myanmar, should the market become more transparent.

(This report was written during by Hiroyuki Isobe on the last weekend of January, 2021)