Selective loans delay growth of real estate sector

According to real estate agents, banks are starting to enter the real estate sector. However, since the banks are highly selective about what projects can receive loans, they have done little to benefit the public.
Construction and Housing Development Bank (CHD Bank) has been granting loans to companies implementing government projects, while Ayeyarwady Bank (AYA Bank) granted a loan to Sky Suites Condo. Similarly, Asia Green Development (AGD) Bank offered loans to Htoo Group’s real estate projects, according to House.com.mm.
“I talked to many banks about their loan advertisements. Although they are interested, no implementation has been seen yet. Banks are still learning about operating loan systems under the law. They are considering safety and house-mortgaging. It will take time to get permission from the Central Bank, too,” said Mr Jan Sommerfeld, manager of House.com.mm.
Many have criticised the 12 per cent of interest rate plus 1 per cent of service charge on loans by CHD Bank given to the people who want to buy or build houses.
“We can’t afford such a high interest rate. And this loan is only given to those who want to buy housing built by government ministries, not to those who want to buy random ones, there are many limitations. Moreover, since the loan has to be repaid within three or four years, civil servants and middle-class people like us are still far from buying homes,” said an employee of a local company.
In other countries, the real estate market is a basic target for investment firms and an important part of the financial sector. However, in Myanmar, banks remain only selectively involved in the real estate sector.