Posted on 10 Jan 2013
In contrast with the dismal state of the real estate market in Viet Nam, the Hoang Anh Gia Lai Group has announced it has invested in a US$300 million mega-complex building in Yangon this year.
The group said it expected to reap large profits from the project within five years, the group's director Doan Nguyen Duc was quoted as saying on the online site VNExpress.
The second wealthiest man in Viet Nam's stock market said this was the best time to invest in Myanmar's property market. For three years, the local property market has cooled down to "0 degrees Celsius", but Myanmar's has heated up, Duc was quoted as saying.
He noted that the swift-footed would win big if they entered the Myanmar market now.
The first phase of the project is expected to be completed this year and put into use in 2014.
The group will export about 30,000 tonnes of steel and 200,000 tonnes of cement and other materials from Viet Nam, including stone, glass and wood, to Myanmar for the project's construction.
Duc said he had received favourable conditions to invest in Myanmar.
He pointed out that transporting steel from a factory in Viet Nam to Yangon would cost 20 per cent less than transportation in Viet Nam.
For example, expenses for transporting cement from Viet Nam's Quang Ninh Province to Yangon by sea would be cheaper than road transport from the province to HCM City.
In addition, labour costs in Myanmar are only half those in Viet Nam.
Duc, who said he had been studying the market for the last two years, pointed out that supply in the Myanmar property market was low and three to four times higher in price than in Viet Nam.
A grade-B office in Yangon rents for $80 per sq metre a month, four times higher than in HCM City. Grade-A offices rent for $100 per sq metre a month. A room at a four-star hotel is $300-400 a night, with many hotels booked because of the lack of supply.
Duc said that he would receive about $300 million after selling 1,000 apartments, with a selling price of $300,000 on each 60 sq-metre apartment.
With a leasing price of $80 per sq metre a month, he could earn $100 million for an office building.
With broad economic reform and incentive policies, Myanmar has become a target for investors from every corner of the world.
The demand for offices, trading centres, hotels and apartments will rise sharply, according to Duc, who has invested in Viet Nam and Thailand, predicted that Myanmar's real estate market would reach "80 degrees Celsius in 2018". So, he needs to complete the first phase of the project this year.
Viet Nam's investment in Myanmar is expected to reach $2 billion by 2015, according to the Association of Vietnamese Business Investors in Myanmar.
