REAL ESTATE: MANDALAY- Property prices crash in Mandalay as tax bites

Due to unexpected currency fluctuations, interest in the property market has dropped drastically and property agents are now focusing on properties below K100 million rather than higher-value deals, said U Wanna Soe from the Phoe Lamin Real Estate Agency.

In the current situation, changes in real estate prices have become more noticeable in sparsely populated areas than in the inner-city area, he said.

“All types of transactions have dropped but there are at least a few deals in residential areas. No sharp changes in prices have taken place in residential areas, but prices for non-residential areas have now fallen by 50 percent compared with 2011. The market used to be very active in non-residential areas, especially in areas of Pyigyitagun township and some parts east of Myothit,” said U Wanna Soe.

Due to speculation on Mandalay’s property market, real estate prices surged some seven years ago before stabilising again. A new tax law enacted in 2016 dampened the market further. Under the new law, transactions on property values up K30 million are taxed 15pc, from above K30 million to K100 million 20pc, and above K100 million 30pc. Because of this, transactions on properties valued above K30 million became noticeably fewer.

‘All types of transactions have dropped … prices for non-residential areas have now fallen by 50 percent compared with 2011.’ – U Wanna Soe, Phoe Lamin Real Estate Agency

“Real estate prices in locations where there has been no prior development can be as low as around K20 million. People dare not buy land in unbuilt areas because they are afraid of squatters. The prices for such locations are always low,” said U Wunna Soe.

He said it would probably take a restructuring of the taxes and also appraisal rates in the region to improve the market. Although people are unhappy about the real estate tax, there is no sign the government will amend both tax rate and appraisal rates. The regional finance minister said during the sitting of the Mandalay Region Hluttaw in December, 2017 that there is no plan to reduce the standard rates for Mandalay’s property market.

“Sales are obviously quiet in Pyi Gyi Tagon township. So, prices are dropping, especially in the areas where there has been no development yet. Although sales are quiet, this is the best time to buy property. Sellers cannot ask too much for their properties in this situation,” said real estate agent U Pyu from Pyi Gyi Tagon township.

PHYO WAI KYAW