YANGON -- Japanese housing developer Tama Home will establish a condominium joint venture in Myanmar in a bid to attract rising ranks of higher-income buyers.
Tama Home and local partner Kakehashi Real Estate Group will set up the new company, which will serve as the lead contractor on projects. Construction has started on a 541-sq.-meter lot that will host a 12-story building containing 23 units. The condos are expected to be completed in 2020 at a cost of roughly 300 million yen ($2.74 million).
Depending on the success of the business, Tama Home will embark on one or two condo developments a year in Myanmar. Projects past the initial one will cost around 1 billion yen each in an effort to reel in upmarket buyers earning the equivalent of $90,000 or more annually.
Tama Home will own 35% of the joint venture. Under current law, if as little as a single share of a company is held by a foreign group, that company is treated as a foreign entity and subject to a host of restrictions. But legislation passed last year, and set to be implemented in August, will recognize a business as a local company if foreigners own no more than 35%.
In the real estate development sector, foreign companies are forbidden from owning land and need state authorization to make use of a plot. The constraints have given local companies an advantage in the property market.
In Japan, Tama Home is facing a market that is contracting amid a graying population. To counter that, the company seeks to generate 20% to 30% of sales offshore by 2030. Tama Home opened upmarket condos in Cambodia, and the footprint has extended to Myanmar, where demand is expected to rise as the home loan market develops.
Leasing rates in Yangon have been falling of late, according to data from real estate services company Colliers International. Rents had skyrocketed two to three years ago due to a housing shortage.