With the Ministry of Construction’s Condominium Rules directly targeting offshore investors, expectations are rising that implementation of the new regulations will increase demand in the property market, particularly the condominium segment.

The rules, announced in mid-December, ease foreign ownership restrictions and provide greater clarity and safeguards for buyers.

Fewer restrictions for overseas investors

Several restrictions on foreign company operations in Myanmar have been reduced or removed. This includes rules relating to international entities’ shareholdings in local firms, which no longer require prior regulatory approval.

The new rules also remove the stipulation that forced foreign investors to purchase units above the sixth floor of a condominium. Overseas buyers can now acquire up to 40% of the total floor area of a complex, also allowing prospective buyers to invest in lower-rise buildings.

Condominium projects may now be jointly developed with foreign individuals or entities. A permit must be obtained from the Myanmar Investment Commission, along with approval from the relevant management committee and a formal agreement with the local developer.

Greater protections for buyers

The rules specifically include existing buildings as well as those under development, while also increasing buyer protections on new developments. 

In a move designed to increase protection for investors, while also taking developers’ cash flow into consideration, builders must complete 30% of a project’s foundation before units can be pre-sold.

Developers must now also deposit 20% of the total investment cost before unit titles may be issued. 

Increased clarity on existing legislation

The amended Condominium Rules specify the process and documentation required for applicants seeking develop condominiums as well as the procedures used by authorities when reviewing a licence application.

Rising expectations for property market

In the short term, the government’s decision to postpone implementation of the regulations until August could hold back the market in the next few months. 

However, as the Condominium Rules are implemented, the property market is likely to see an increase in sales, particularly in mid- to high end residential, as well as an increase in development of new projects.

In addition, a recent report by international property consultancy Colliers suggests the lower-tier apartment segment may see an improvement in 2018 as increased buyer interest and confidence, combines with a limited supply of studio and one-bedroom units to create development opportunities.

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