Thursday, September 21, 2017

Developers to challenge results of high-rise review

High-rise developers ordered to drastically change the designs of their projects are planning to challenge the government, on the basis that its review of Yangon developments was not transparent.

i-Green company has been told to cut the number of floors on this project on Sein Lae May Yeikthar Road to six. Photo: Aung Htay Hlaing / The Myanmar Timesi-Green company has been told to cut the number of floors on this project on Sein Lae May Yeikthar Road to six. Photo: Aung Htay Hlaing / The Myanmar Times

A high-rise inspection committee was formed last month to review 64 unfinished projects across the city, to ensure they were in line with draft zoning plans. The committee gave its first round of feedback to 12 developers earlier this week.

Almost all 12 have been told to cut floors from their project designs. In some cases they will have to knock down floors already built while, in others, companies have pre-sold apartments which they are now not allowed to build.

The Yangon Region government planned a small press conference yesterday to explain its decision, but later cancelled it, claiming too many people had turned up. Among the crowds were several developers, hoping for an explanation.

U Zay Win Htut from Naing Group, which is developing a 20-floor project on East Horse Racecourse Road, said he feels cheated after being told to cut the number of floors to 16 because the project does not have enough parking spaces.

The company will challenge Yangon City Development Committee, because the project complied with all the previous government’s rules. “We will meet with the person responsible, because we have no idea which standards they used to make this decision. They have not given us the method, only the result,” he said.

“We do not want to knock down floors, which cost around K3 billion each to build. This is a huge loss for us. In the worst case, we hope we can use the lower floors, which were supposed to be used as office space, to extend the car park.”

He said his company will seek advice from lawyers, because the project had permission from the previous government. “This is a very bad way to treat people who have been following the law. The [current government] should have passed a new law before doing this review. Now there is no new law, and [the committee is] using its results as law,” he said.

When the review was announced in May, the head of YCDC’s engineering department (building) U Than Htay explained it by saying, “The standard adopted in the past might not be the same as the standard we adopt now.”

U Tin Than Oo, who consults on property law, said angry developers can turn to the legal system. “In my opinion, developers have a chance to solve this problem the legal way. But it is their responsibility to compensate customers for the pre-sale of apartments [that will not be built].”

Yangon developers usually sell units through pre-sales, whereby buyers pay for an apartment before it is built, either upfront or through an instalment system, with payments tied to progress at the construction site.

U Win Naing of Pyae Soan Win Naing, the developer of The Illustra, a high-profile luxury project on Phoe Sein Road, also plans to complain after being told to cut the number of floors at his project by an unspecified amount.

“We will complain about this. The result is unclear and [the committee] does not know anything about our project. I think other developers will complain too, because all of the results are unreasonable,” he said.

A spokesperson for Living Square, the developer of Kabaraye Executive Residence, said his company had followed all the rules set out by the previous government. The project was due to reach 32 floors, but the government has told the company to stop building at 18.

“We have invested around US$30 million and we have already bought construction materials for the whole building, because we were granted a permit to build. That is why if they cut the size of our high-rise now, we will suffer big losses,” he said.

The company will ask the government to reconsider its decision. If it refuses, they will seek legal help, he said. “Our project has foreign partners including contractors and architects, so if the government treats us in this way, foreign investors will be afraid too.”

U Kyaw Kyaw Naing, developer of i-Green company, which is building a 12.5-storey project on Sein Lae May Yeikthar Road, said his company will lose around K1.6 billion in construction costs if the government follows through with an order to demolish four floors that have already been built. Commenting as a major developer in Yangon with joint-venture foreign partners, Daw Sandar Htun of Shwe Taung Development said the government should create a stable business environment.

“We believe business certainty is a key factor in attracting investment, both foreign and local, and that clarity on the rules and regulations will certainly help to bring more investment into our country,” she said.