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Property market unmoved by ‘New Rangoon’ project

In Rangoon’s southwest, a cluttered city skyline immediately gives way to lush green farms— individual blocks that are now worth tens of thousands of dollars each.

The sprawling paddy fields on Rangoon’s doorstep have now caught the eye of investors, as they occupy land a stone’s throw from an ever-growing city with a bloated real estate market.

Rangoon Regional Assembly on Monday began inviting tender bids from large-scale Burmese developers for a new town plan to be located west of the city centre.

Application forms will be available until 21 July, and submitted tenders will be opened and analysed on 18 August, state media reported on Tuesday.

Than Oo, a Rangoon-based property consultant, emphasised just how much the mega-project is likely to cost.

“The project is worth a tremendous amount of money – up to US$8 billion, as well as some amount of Burmese currency equal to around US$7 billion –  in total some 15 billion US dollars,” Than Oo said.

“So it is not the kind of project that is approachable by a regular developer. It is for developers who can afford it, and they must first solve several outstanding land issues. The government needs a major scheme to substitute new land for the original owners.”

With so much money at stake, the project has already been embroiled in controversy.

The current tender bidding process comes after Rangoon authorities handed the contract to a little known construction firm, forcing land prices to skyrocket overnight.

But after accusations of cronyism, the government quashed the deal, and issued a call for new investors. This time, land prices took a hit.

But the market has never dipped too far, according to Than Oo.

“In some villages, the price of a 20x60ft or 25x50ft land plot, which were previously around 15 million kyat ($15,000) have now gone up by about three or four million kyat. It’s now difficult to even find a plot for 20 million kyat. Prices of farm plots in ‘good areas’ near the road have gone up to over 100m kyat per acre.”

Thirty thousand acres here have been designated for the project, now mostly farmland and low-income residential neighbourhoods.

The tender is set to open on 18 August, for what is set to be the largest civil construction effort in Burma since the building of Naypyidaw.