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Economy

Mitsubishi consortium to build Yangon complex

A graphic image of a new commercial complex in central Yangon.

TOKYO -- A Japanese consortium that includes developer Mitsubishi Estate and trading company Mitsubishi Corp. will build a commercial complex in Yangon in partnership with local developers.

The project, in a country often referred to as Asia's last frontier, includes two office buildings, condominiums and a hotel and services unit on a 4-hectare site in the heart of Myanmar's commercial capital. The site is right across from Yangon Central Railway Station.

The project, set to start by next March, will likely face many difficulties due to its scale. "Just getting the construction materials into the country smoothly is a lot of trouble," said Akihiro Kawano, manager of Mitsubishi Corp's ASEAN real estate development department. Construction materials such as reinforcing bars, steel, concrete and timber are needed, as well as gravel to stabilize the land. The processes for things like hiring truck drivers to carry the materials work differently than in Japan, and the process of receiving permits and fulfilling administrative requirements has been hobbled in part by Myanmar's political instability.

The key to completing the work on time, by March 2021, is good project management that is well versed in local practices. For example, securing access for commuters is important, because many people in Myanmar drive to work. Though details are still being worked out, the developers are considering separating the flows of commuters and visitors to avoid congestion. A large parking lot will also be needed.

The level of earthquake resistance for the buildings must be decided. The standards Mitsubishi Estate has followed in constructing many buildings in Tokyo's Marunouchi business district -- about 50% stricter than the minimum legal requirements in Japan -- are excessive for Myanmar. The standards will instead be based on a previous project in Singapore, the company said.

Each of the two buildings will be relatively spacious at around 33,000 sq. meters, since foreign companies looking to enter Myanmar tend to prefer large buildings. The security gates at the front -- a basic feature of Mitsubishi Estate buildings in Japan -- are especially appealing to the locals, the company said. "We will build some of the best-quality buildings, different from our rivals'," Mitsubishi Corp.'s Kawano said.

Real estate development is set to accelerate in Yangon. Since Myanmar shifted to a civilian government in 2011, local office rents have jumped fourfold from $20 per sq. meter before the transition, according to Mitsubishi Corp. Rents for the new buildings will be set at low levels to compete with rival buildings of similar size, Mitsubishi Estate said.

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