Published in Mizzima Business Weekly in December 2013
“Everything in Myanmar is negotiable:” an interview with Robin Aung Saw Naing, Managing Director of Pronto Services
Robin Aung Saw Naing runs the only house hunting service for expats in Yangon and he talks to Mizzima Business Weekly about doing business in one of the world’s most inflated real estate markets.
When did you set up Pronto Services and why?
I established Pronto Services in February this year. For the past 12 years I’d worked for international non-government organisations (INGOs), so I had a lot of contacts in the expatriate community in Yangon. I enjoyed working on humanitarian issues, but at the beginning of the year I decided to try my hand at a commercial business. I’d always wanted the opportunity to be an employer rather than an employee.
How would describe the rental market in Yangon at the moment?
It’s crazy. Super crazy. And the prices are still going up. It will take a few years for things to settle down and for rents to become more reasonable. There might be some relief next year, when some of the major construction projects are finished, such as Shwe Hin Tha Condo. There are about four or five big condominiums being built at the moment – although rentals at these places still won’t be cheap, they will at least offer quality accommodation. Often people in Yangon say, “Let’s put an elevator in the middle of the building and call it a condominium.” But there’s no swimming pool, grocery store, gym – nothing. That’s an apartment with an elevator, not a condo…
Why is renting so expensive in Yangon?
People say it’s due to high demand and low supply, but that’s 100 percent untrue. There’s still a lot of empty houses and vacant land, even in popular areas such as Golden Valley. There’s plenty of supply. The problem is that 90 percent of the apartments and houses don’t meet any requirements an expatriate is going to have. For example, owners want to rent out a house with squat toilets, or every room is painted a totally different colour. Sometimes owners install dark glass on the windows, so the lighting is poor and makes a place dark and depressing. There are many beautiful homes that fall short on quality. It’s a problem. We have 1,000 properties in our database, but I’d say that only 200 would meet an expat’s requirements. The rest are junk, to be honest. Pronto is planning to host a workshop on renovating homes, which will probably take place in February next year.
Is Golden Valley in Bahan Township still the most popular area for expats?
Everybody wants to live there, though for different reasons. Some people who have never been to Myanmar arrive in Yangon with the impression that Golden Valley is the safest, nicest and quietest place to live. But it’s not completely true. Thieves are a bit of a problem there and it’s not easy getting a taxi as there’s not a great deal of passing traffic. Although rent prices in Golden Valley have increased this year by more than 100 percent, people still want to live there because it’s in the middle of the city, which makes it a very convenient location. But the main reason why most expats want to live in Golden Valley is because of ISY [International School Yangon]. Most of the expat kids, especially those from the diplomatic community, go to ISY. So parents want to be close to the school. It’s only natural that priority will be given to the needs of their children.
One township that’s becoming very popular is Mayangone and the Seven Mile area. Prices there are more reasonable and it’s still a lovely place to live. As the traffic is getting crazier in Yangon all the time, a lot of people who don’t work downtown and don’t want to pay the sky high rents in Golden Valley prefer to be in either Mayangone or Yankin townships.
How much should an expat family expect to pay to live in a house in Golden Valley?
The thing is that price doesn’t really depend on how many bedrooms there are – nor does it even depend on the quality of the house, or the location. It all depends on the attitude of the owner. It’s a crazy market and landlords are just shooting for the sky. We rented out a home in Golden Valley for $3,000 a month and then the one next door came on the market – it’s smaller but someone agreed to pay $4,000.
What’s the most expensive property you have listed?
The most expensive place we have on our database costs $25,000 a month. It’s on Dhamazedi Road. Even though it’s a great place, I myself wouldn’t pay such money. That’s a lot of money!
Do you ever ask owners to reduce the amount of rent they’re asking for?
We always negotiate with owners. Everything in Myanmar is negotiable – I really believe that. I often joke with my expat friends, saying to them, “Guys, everything in Myanmar is negotiable – even whether you’ll go to heaven or hell.” [laughs]
Most landlords are willing to negotiate with us, but every now and again we get a tough one and it’s difficult to do so. We also always tell our clients not to act as though they really like a place, even if they do. That will make it a lot harder to get the price down.
It’s good to see that Pronto doesn’t charge renters an agent fee, but is there any end in sight to the requirement that rent be paid 12 months upfront?
This has been a very common practice in Myanmar for a long time – it’s the same for expats and locals. It will be very hard to change this – very few landlords are willing to sign a lease for three months. I know it’s frustrating: when I was living in Cambodia, I had a really nice apartment for only $700 a month and that included utilities and the internet. I paid on a monthly basis, as I did in Bangkok. I do try to negotiate with owners but most of the time they refuse. Some landlords ask for three years upfront – we even had one in Yankin who asked for five years!
Most foreigners can afford to pay higher rent – but what is the effect on locals?
It’s true that most foreigners can afford to pay. Most of our clients are diplomats, or work for NGOs or large companies, so it’s the organisation that covers the rent. Sometimes we get individuals who are looking for an apartment for around $800 and we help them too. But for locals – well they have to manage somehow. What we’re seeing is that especially in the downtown area, where there are so many offices with a lot Myanmar staff, is that they’re being forced to move out of the apartments they were sharing with friends. Rents downtown have also increased 100 percent this year, so that would mean having to spend 80 percent of their salaries on rent, which is impossible. So a lot of young people are moving out to Thaketa Township and spending more time commuting to work. Local staff around the Golden Valley area are also having to move further out. Increased rent prices are affecting many, many locals. Even me – I’ve been paying $1,000 a month for this office [in Kandawgyi Towers] but the owner said he wanted $2,000 next year. I told him I’d go and set up an office in a monastery, even though it’s illegal… But seriously, we’re moving to an office in Yankin Township in March.
Has the government made any attempt to regulate prices?
A couple of months ago YCDC introduced a tax scheme – a price was fixed per square foot according to which township a house or apartment is located in. This happened in Mandalay too. But in reality it didn’t work – owners just pay the fixed amount of tax when they go to the government office and then charge whatever they want for rent.
Are there many nice places to live in the downtown area?
It’s a bit difficult to find a nice apartment that meets all the requirements of an expat. A person would need to spend around $3,000 a month for a decent place. I’m always on the lookout for one of those beautiful apartments in a colonial building but they’re not very common, unfortunately. Again, it’s because renovations are needed before someone could move in.
How does Pronto help an expat find a house or apartment?
A client emails us with their particular requirements and we come up with a shortlist of properties from our database. We send the list back to the client, and then we invite the client to our office – or we can go to their office. But it’s better for them to come here, because then they can see all the properties.
At the moment we don’t charge extra for services: we provide free transport to go to view the properties a client is interested in and we provide an English speaking, non-smoking, non-betel chewing driver. On the way we show the client all the info and specifications on a laptop, so it’s fresh in their memory.
Before we even start negotiating with a landlord we have to find out who the real owner is. A couple of times people have said to me, “I am the owner, why do you need to see the ownership certificate?” And I say, “Look, their rent will be paid by the government in their own country. If the person works for an INGO, the money is coming from the donor.”
And then the “owner” runs away! There’s a lot of monkey business in real estate, so we need to be very, very careful. It’s a big amount of money that’s being paid up front. We don’t deal with other real estate agencies either, just directly with the landlord. If it’s a new building, we also check whether YCDC gave the property a residence permit after construction was finished on it.
Once we have the documents, we’ll return to the property to check that the electricity supply and water is working. We check everything. Once that’s done, we start writing up the contract. Our contracts are very thorough: for example, an owner must allow a foreigner to transfer the property to another expat if they have to leave Myanmar, or the rent money must be repaid. If they refuse this, we don’t proceed any further.
Once the cash deposit has been made, we strongly advise our clients to pay the final payment via a bank transfer. This is because it’s a large amount of money and a bank transfer will offer proof it’s been made, and the owner has to show ID and so forth to collect it. Myanmar also has a strange system of only accepting crisp, clean US bank notes, so it avoids a lot of the hassle of that. It’s now a lot easier to make bank transfers to Myanmar which is really good.
What about choosing furniture if the apartment comes furnished?
Ah, sometimes the furniture in a place is so funny in Myanmar. Sometimes owners say they will provide a furnished apartment but if it’s stuff from China it will only last for two days before it breaks. So we negotiate to be allowed to choose the furniture – but at the same time I ask expats not to choose the most expensive things. It’s a compromise. The deposit will generally always be higher if a lot of furniture is provided.
Why don’t you list the properties on your website?
Our website is still under construction – it will be ready by the end of the year and we will put our properties on it then. However I’ll only list the properties that I think are satisfactory in terms of quality.
What happens if there’s a problem during the term of the lease?
We take responsibility to solve it. We’ll ask the expat to sign a document giving us the power to take legal action, and we’ll send a legal advisor to speak to the landlord –with a recording machine, so that we have proof that a landlord has said they’re unwilling to follow the terms of the conditions of the contract.
It’s not just landlords who aren’t following the terms – we also encounter expats who are subleasing even though the contract doesn’t allow it. Or sometimes an expat has a friend staying on a tourist visa, which isn’t allowed under Myanmar law and when the landlord finds out, they’re not happy. This is a strange law also – when I go to Bangkok I stay with my friends, but you can’t do that here…
Do you have any plans to expand your business?
We have 14 staff at the moment and I am thinking of expanding the types of services we offer. At the moment it’s a house hunting service for expats, plus maintenance services. Whenever someone has a problem with a place they’ve leased from Pronto, they can just call us and we’ll come and fix it. But I’ve also bought a lot of tools from Switzerland, which I’ll bring in next year to use for repairs and what not. We have an engineer to do the repairs, but we could make this service available for all properties in Yangon.
My other idea is to set up a fully-fledged legal department that could take on a variety of issues expats may have. We already have two part-time legal advisors who come in whenever we need them to. In future we will also take responsibility for the registration process at immigration and will source cleaning staff and so on. We’re also thinking of offering a visa extension service for expats.
For more information, contact Robin Aung Saw Naing on firstname.lastname@example.org