A shortage of building materials and antiquated construction methods in Yangon, Myanmar's largest city, have played a role in the skyrocketing rents in the city, says Hong Kong brick maker Dixon Chan.
"When I visited brick makers in Yangon recently, I found they either use home-made machines or German machines that are 30 or 40 years old," said Chan, director of Hong Kong-based "eco-brick" company Tiostone Environment. Tiostone has made eco-bricks in Hong Kong since 2005 by turning waste glass into bricks.
"It takes two to three weeks to build one floor of a construction site in Yangon compared with two to three days in Hong Kong," said Chan. Irregular bricks produced by current sub-standard production lines are one of the reasons for lengthy construction periods, said Chan, because brick layers were forced to spend more time aligning bricks with mortar.
The resulting prolonged construction periods meant it was taking a longer time to solve the country's shortage of flats, hotel rooms and offices, he added, and this contributed to the high rents in the city.
Spotting an opportunity, Tiostone last year teamed-up with local property developer SPA Group, formed by Chinese Myanmese real estate mogul Serge Pun, in a bid to bring international brick production standards to the nation.
Their HK$10 million factory in Yangon will start production early next year with a start-up capacity of 50,000 square metres of bricks a year.
Chan said he paid US$275 per night for the room he stayed in at the Parkroyal hotel in Yangon. Two years ago he paid less than US$100.
The rent for his factory, he said, would have gone up 30 per cent if he had waited three or four months longer. He added that to ensure his landlord would not let the premises to someone who was prepared to pay more, he was thinking of paying a full year's rent in advance, or perhaps even three years'.
In July, the monthly rental for a standard size office in the city ranged between US$25,000 and US$40,000, translating into a rent of US$70 to US$100 per square foot, compared with US$75 per sq ft in downtown Manhattan, according to property consultancy CBRE. Despite their irregular shape, the bricks made in Yangon cost two to three times more than bricks used in Hong Kong or in the southern parts of the mainland because of the shortage of supply.
"But it is not economical to import bricks into the country because they are heavy and the import costs would barely be covered," Chan said.
Myanmar's rules present yet another challenge for foreign investors. "I have asked what import tax I would pay if I brought my brick machines into the country. But different officials give me different figures, which leaves me quite confused," Chan added.
By mixing recycled glass with coal ash and other construction waste, Tiostone produces 100,000 to 150,000 square metres of bricks in Hong Kong a year, which is equivalent to covering the pavement along the entire length of Nathan Road 20 times over.
Tiostone now hopes to introduce its eco-bricks to Myanmar, which could guarantee a stable supply of recycled glass. "There is only one local beer company in Myanmar. We can secure the glass by negotiating with just one company," said Chan.
In addition to Yangon, Chan is also eyeing another brick production line in Mandalay, which shares a border with Yunnan, as many property projects are in the pipeline in the area.
source: South China Morning Post
http://www.scmp.com/business/companies/article/1341488/hong-kong-firm-tiostone-seeks-make-eco-bricks-myanmar-amid
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