Can ordinary workers afford a room in downtown Rangoon?

Monday, 12 March 2012 18:34 Nyi Thit

(Mizzima) – Have real estate prices in Rangoon already gone beyond affordability for average Burmese?

 

An apartment building in downtown Rangoon opposite Bogyoke Market. Photo: wikipedia

Rangoon, the former Burmese capital, is now known as the financial capital of Burma, which has driven up prices for land, single rooms and homes. The city is easily the most expensive place to live in the country. 

In 2005, all the key government ministries decamped, moving to Naypyitaw, leading some people to believe that Rangoon would be relatively inactive – but just the opposite has happened.

In comparison with 2005 real estate prices in Rangoon, prices have nearly doubled in seven years. Prices have shot up the most in six townships in downtown Rangoon: Latha, Lamadaw, Kayuktada, Pabedan, Pazundaung and Botahtaung.

A well-known agent in Rangoon said, “The current land price in Kyauktada Township in Rangoon is 1.2 million kyat (US$ 1,520) per square foot. This is the highest land price in Rangoon.”

For many Burmese it is difficult to open an office in the central business area of Rangoon. The price for a 25-foot x 60-foot office building (including land) in Kyauktada Township is about 1.5 billion kyat. Even the price of a building that is not in a strategic area in the township is about one million kyat per square foot. 

One person who has rented a room in Kyauktada Township, said, “Owners usually rent their buildings in Rangoon for businesses. There is not much activity in the buying and selling of land. The rental fee is more than one million kyat per month. If a person wants to rent a room downtown because it’s near to their work, the price, even for a room on the 7th or 8th floor, is more than 100,000 kyat (US$126). And the landlord usually wants a six-month contract. And after six months, the landlord often increases the rental fees.”

A worker who rented a room in Pazundaung Township, said,  “Now, the room I’m living is like a hall. There is no other sub-room. The rental fee for the room on the seventh floor is 850,000 kyat per month. The contract has expired and the landlord increased the rental fee. They often increase the fee at least 30 percent.”

Many workers want to stay in the downtown area because their office is located there. But their salaries are not in line with the rental prices so most have to stay on the outskirts of Rangoon, according to workers.   

“Many workers have to rent rooms in South Okkala, Thingangyun, Dagon Myothit or Yuzana Garden City,” said one worker. 

In townships such as Bahan, Kamayut and Mayangon, where many wealthy residents live, land prices range from a few billion to tens of billion of kyat.

According to real estate agencies, the land and rent market has become more active because of the stable political situation.

On the other hand, some big construction companies are trying to develop a cheaper real estate market for apartments based on installment payments, and they have started developing programs with banks.

However, the initial installment payment is still about four million kyat and the monthly installments are around 300,000 to 400,000 kyat, still too high for average workers.

 

One potential buyer said, “Although they said the apartments are intended for people from the middle class, the prices of the apartments sold in installments range from 40 to 50 million kyat. So, even if the apartments are sold in four-year installments, most employees cannot buy it because their salaries are too low."

Knowledgeable Rangoon residents said that a poor banking system that has yet to develop an efficient loan-based system for homes and low salaries have combined – at least for now – to shut out average workers from living near their jobs in central Rangoon.

Ref:mizzima