YANGON, Myanmar — Hoping to set up shop in Yangon? Bring duffel bags full of cash.
You might assume that property in Myanmar, one of Asia’s most impoverished and dysfunctional nations, would rent for a pittance.
But as the long-shuttered pariah zooms towards political and economic reform, it is swarmed by foreign investors speculating that Myanmar’s big boom is nigh. There are now too few hotels and office buildings in the crumbling commercial capital, Yangon, to cope with the influx of moneyed outsiders.
It doesn’t take an economics whiz to guess what happens to property markets with a glut of interest and a paucity of supply.
Yangon hotels that once charged $60 a night are charging $250 or more. The average rental price for office space has surged to $60 per square meter, according to Antony Picon, an associate director of research with the Colliers International real estate services firm.
“I’ve seen a swamp in the middle of nowhere and they’re asking the same thing they’d ask in the center of town,” Picon said. Houses that recently rented for a few hundred bucks a month are going for thousands.
More from GlobalPost: Myanmar's real power struggle? Keeping the lights on.
Picon's extensive survey of Yangon’s market reveals that the city has only 60,000 square meters of office space. To add context to that figure, consider that the entirety of Yangon’s office space would fit into Bangkok’s largest office building.
Not once. Nearly three times over. Cambodia’s Phnom Penh, another dusty urban center in a country wracked by poverty, has more than twice that amount.
Yangon’s stagnancy is owed to Western sanctions, now largely suspended, that have forbid American and Europeans from doing business in Myanmar.
According to Picon, large hotels weathered the bad times by renting out entire floors to foreign organizations that demand Western-caliber facilities. Traders, Yangon’s major business hotel, still doubles as a de facto home base for the United Nations in Myanmar. Such high-end hotels offer a precious commodity: back-up generators that soldier on when the power grid fizzles out.
Local businesses seeking to expand are also falling prey to the property bubble, said Moe Kyaw, managing director of the Yangon-based Myanmar Marketing Research and Development Research Services. He is flabbergasted that centrally located homes that recently rented for $300 per month have been converted to offices that now go for $6,000.
“I mean, $6,000! How can you make $6,000 worth of money in Myanmar? I really do not know,” he said. "There will be a burst in the bubble soon.”
More from GlobalPost: Myanmar open for business?
Picon agrees. “It will be a bonanza for anyone who can put up a hotel very quickly,” he said. As for office space, he predicts the average rent per square meter could average $150 before it sinks back down to a rational price. That would top the current figure in Beijing ($140) and New York ($120), according to stats published by real estate company Cushman & Wakefield.
In a sense, Picon said, Yangon’s property market is not so different than the city’s souvenir market.
“If you go to any market in town and look interested in one trinket,” he said, “they’re going to raise the price.”