Myanmar’s Department of Urban Housing and Development (DUHD), a department of the Ministry of Construction, has entered into a partnership with public company Myanmar Construction and Development (MCD) to finance and build a low-cost government housing project in Yangon.

MCD was set up in 2014 by members of the industry body Myanmar Construction Entrepreneurs Association (MCEA) with an aim to cooperate with both local and foreign companies to develop budget housing, airport, industry, road and government construction projects.

Land will be supplied by the Myanmar Government in East Dagon and Thanlyin townships, as part of the DUHD’s plan to build 8,000 low-cost apartments for Dagon, Thanlyin and Mingaladon townships. Construction costs incurred by MCD will be covered by the proceeds of the housing sales.

The project is expected to take two years to complete, with apartments sized at around 400 square feet. Buildings will be either four-storeys with six rooms per floor or five-stories with eight rooms per floor. It is hoped that these apartments will be sold directly to low income households, though with units expected to cost between K10 million and K20 million (~US$7,350-US$14,700) each it is unclear whether those in the lowest income bracket will be able to meet repayments. In the past the government has used a lottery system to allocate low cost housing, though the plan for this development has not been announced.

According to the World Bank, Yangon’s population is growing much faster than its spatial area, with much of this growth coming from rural urban migration. It is clear that affordable housing is much needed in this area. However, rather than setting a precedent for more of this type of project in the future, analyst Joshua De Las Alas of Colliers International believes many questions remain, particularly on the issue of affordability among low-income buyers. He asks, “How do we define low cost government housing? Who is really intended to? And do the prices address the affordability issue among low-income buyers?”

“While low cost government housing has been a common discussion, it continually fails to address the issue as to whom it is genuinely intended to,” De Las Alas continues. “The prices remain a far reach among low income buyers and units are likely to be purchased by speculative investors instead for rental income. However, we understand the hurdles in lowering the prices. To begin with, most of the construction materials are imported which in turn exerts upward pressure on the selling prices. Moreover, the government does not have the capacity to subsidise or provide financing schemes in which neighbouring countries channel through a national savings program.”

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