Developers avoid low-cost housing projects
By Htar Htar Khin
March 28 - April 3, 2011
March 28 - April 3, 2011
LOW-INCOME earners living in Yangon face a tough choice – sacrifice a big chunk of their income to live close to downtown, or reside in the outskirts and endure a twice-daily commute.
The five-million-plus residents of Yangon live in an increasingly cramped city, with limited land available for new housing and very little investment in low-cost options for low-income earners.
The land that has recently opened up in Yangon for development – mostly in the downtown area – has been set aside for high-end apartments or condominiums and few construction firms are considering low-income earners.
One company looking to cater to this market is Taw Win Family Construction, says the firm’s chairman, U Ko Ko Htwe.
“The low-cost market is a tough one for developers because keeping prices down means that profits are always going to be thin. It’s a risky business because there’s always the chance that problems will result in a loss,” he said.
However, he said the company began developing its 1300-apartment Muditar low-cost housing complex in Mayangone township this month. He added that making such housing available to low-income earners presented a raft of challenges because he has been working to offer instalment payment plans and pressure banks to offer loans.
The result of such low investment in low-cost housing is a shortage of cheap apartments for low- or middle-income earners.
“Yangon now has more than five million residents and needs more than 200,000 new apartments every year but only 20,000 are built. The gap is huge,” U Ko Ko Htwe said.
U Lazarus, the managing director of Yadanar Shwe Htun Construction, said most developers see no reason to invest in low-cost housing and would not do so unless the government made it worth their while.
“Land is the biggest cost. The cost of building each square foot in an apartment complex is about K15,000 but by the time we’ve bought the land it costs K50,000,” he said.
“It’s true we need more low-cost housing in Yangon but solving that requires government-backed bank loans and cheap land,” he said, adding that Mingalardon, South Dagon, Dala and Thanlyin townships are some of the areas where developers can find large, cheap plots.
U Ko Ko Lay, the director of Three Friends Construction, agreed that land prices were limiting the building of low-cost housing.
“Construction costs are the same whether the project is in Pazundaung or North Dagon township. But the profits for developing in those two locations vary wildly because of how much the land costs,” he said, adding that profits can differ by as much as 40pc in these two townships.
And while it’s cheaper to develop low-cost projects on the outskirts of the city, unless public transport is available, people still won’t buy apartments, he warned.
“The transport options available to clients are a big consideration – if good transport is not available the project will fail and the developer will lose money,” he said.
However, he suggested that if large investments were made in Yangon’s transport infrastructure, traffic congestion would ease and travel times between the outskirts and downtown would be significantly reduced.
He suggested that parts of East Dagon and Pale township (near Mingalardon Garden City) were examples of areas that had development potential but terrible transport.
Daw Cho Cho, a freelance real estate agent in Yankin township, said low-cost housing was also a turn off for wealthier buyers.
“Buyers who have the choice skip low-cost sites because they worry that the buildings are unsafe, particularly in the event of a natural disaster,” she said.
“When buyers spot things like cracked cement floors and walls or exposed iron bars many just walk away, even if the apartment is K5.5 to K8 million cheaper.”
Daw Soe Soe Lwin, 50, has lived in a ground floor apartment at Yuzana Garden City in Dagon Seikkan township since 2004.
“My apartment has so far been excellent even though it only cost me K2.5 million. There have been a few small problems over the six years but it’s no real trouble,” she said.
U Wanna Phyo Zin, 28, who used to travel from North Dagon to downtown for work every day, said the long commute was awful and finally forced him to move.
“The bad transport network made me suffer every day, particularly since no matter what I did I ended up being late to work most of the time.
“Living on the outskirts was painful and I finally moved to Bahan township, even though it costs me a lot more to rent.”
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