Abandoned colonial buildings in Yangon
could be golden opportunities for Thai firms to turn them into hotels,
which are in high demand to serve the rising number of visitors.
Myanmar is the latest destination on the
list of travellers and businessmen from around the world as the country
emerges from decades of isolation. Last year, over one million visitors
made their way to the country, compared with 816,000 in 2011.
But Myanmar is suffering from a major
shortage of hotel rooms. There are only about 28,000 rooms across the
country. However, in every obstacle lies an opportunity.
Many long-neglected buildings, formerly
government offices, line the streets of Yangon after government offices
were relocated to the new capital of Nay Pyi Taw. These buildings were
mostly built in the 19th century when Myanmar was part of the British
Empire. They are rich in cultural heritage, built in the European style.
There are 187 of them on the Yangon City Heritage List of old buildings
and structures, waiting to be preserved.
The government has put some of these
buildings up for lease or sale. As Myanmar is going through an economic
transition, there is huge demand for office space and accommodation.
In Yangon, there are two main
opportunities in the real estate market - development of medium-and
big-size projects and construction and renovation of colonial buildings
into boutique hotels or restaurants.
Thant Myint U, a well-known Burmese
historian and chairman of the Yangon Heritage Trust, a non-governmental
organisation that aims to promote and protect Yangon's architectural
heritage as part of a comprehensive urban plan, last week urged the
government to set up a framework to balance the demands of investors and
locals.
"We have to make investors happy, make
them confident that they can make money in the future and that people
are protected in terms of public interest and we protect our beautiful
city," he said.
As opportunities are made available, the
Myanmar Investment Commission has pointed out that if SMEs are
interested in Myanmar, they should not do it alone.
"It would be helpful if the SMEs do not
come on their own but form an association. Together they can make it.
They can twin with local companies here so they can pass the
requirements," said Professor Aung Tun Thet, a member of the commission.
One of the major problems in transforming old buildings may not be capital but the ownership of the buildings.
"Many are in dangerous condition. How to
acquire and lease property is the key to this," said Tony Picon of
Colliers International Thailand.
A good example of the renovation of a
colonial building is the US$350-million project by Serge Pun and
Associates in conjunction with Singapore-listed Yoma Strategic Holdings,
which is also owned by Myanmar tycoon Serge Pun.
The project includes the renovation of
the old Railways Ministry headquarters and the development of FMI Centre
and Grand Mee Ya Hta building. The aim is to turn these buildings into
two office buildings, two serviced apartment towers, two hotels and one
retail mall. It is set to become a landmark of Yangon.
The renovation of these buildings is likely to attract many tourists. However, there are some obstacles along the way.
"The first thing to do is to find out
what we are dealing with because it has been here since 1896. It's 115
years old. Obviously, the old plan has been lost, so we engaged a lot of
specialist companies to perform a preliminary investigation of the
building structure and work out how to strengthen, repair and conserve
it," said Paul Anslow, an engineer from Meinhardt Myanmar who is
involved in the project.
The real construction work is likely to
begin in six months. But it will take at least three to five years for
the renovation to be finished. The overall development of the project
may take longer.
To renovate the old buildings, money,
expertise, time and other factors are very important. This raises the
question of whether it is worth the investment to restore the buildings
to put in use again.
Anslow said: "Primarily, you need to
look at what was its original usage and condition, what its condition is
nowadays, and what do you want to do with that building in the future.
So, if it's still in good condition, perhaps there's not too much cost
involved.
"However, if it's in poor condition,
there's going to be a lot of investigation procedures required to bring
that up to standard," Paul said.
With Yangon experiencing a hotel room
shortage, many companies are accelerating construction to meet the high
demand. However, according to a survey by Colliers International
Thailand, most new construction projects are expected to finish later
this year or within two to three years.
For new investors who may have an
interest in turning old buildings in Yangon into business opportunities,
some of the important steps to keep in mind are - prepare a business
plan and required documents.
More details can be found at www.dica.gov.mm or www.mnped.gov.mm.
Thai firms should apply to the Myanmar
Investment Commission for licence approval. To enjoy a better chance in
negotiations, SMEs should join hands - find a local business partner via
business matching. But most importantly, they need to study the laws,
rules and regulations.
If Myanmar can find a balance between
preserving heritage buildings and filling up high demand for office
space and hotels, Yangon will definitely be one of the most prestigious
cities in Asean.
This is the first of our series from Myanmar. Next is the soft drink war amid Coca-Cola and Pepsi's invasion.
source: Eleven Myanmar
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