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Savills Indochina Research
Market ReviewYangon, Myanmar
2H | 2016
2H Market Review | Yangon, Myanmar
02
Myanmar’s population is 54.55 million, of which nearly 70% is of working age. From 2010 - 2015, the country’s average population growth was 0.81% pa, which is expected to slow and result in a population of 56.24 million in 2020. Yangon is the most populous city with 5.5 million.
Myanmar is an emerging economy that reported a GDP of US$64.87 billion in 2015, increasing 0.84% year-on-year (YoY). Reliant upon the primary sector, severe flooding in July 2015 was detrimental to the economy.
Myanmar has attracted large foreign direct investment (FDI). From 1988 - 2015, it cumulatively attracted US$58.2 billion, one-third of which was from the oil and gas industry. Since economic liberaliza-tion in 2012, registered FDI reached a peak in 2014 with more than US$8 billion. However, in 2015, registered FDI decreased signifi-cantly to only US$4.1 billion.
From 2011 - 2015, international visitors to Myanmar increased sharply at an average growth of 42% pa. According to the Myan-mar Ministry of Hotels and Tourism, the number of international visitors to Myanmar was approximately 4.68 million in 2015, a significant increase of 52% YoY.
1. ECONOMIC OVERVIEW
2. YANGON MARKET, 2H/2016
OFFICE
Yangon office stock reached 315,000 m2 net lettable area (NLA), increasing 11% YoY. Grade A remained the largest supplier with over 187,000 m2, followed by Grades C and B. At the end of November 2016, two new Grade A projects entered the market, Sule Square with 28,800 m2 and Crystal Tower with 13,500 m2.
Despite the recent influx of supply, Yangon still has considerably less stock than other Asian cities, being 4% of Bangkok’s, 6% of Jakarta’s, 19% of Ha Noi’s and 20% of HCMC’s.
The average rent decreased sharply -10% YoY. Grade A asking rents range US$45 - 76/m2/mth and Grade B asking rents range US$30 - 50/m2/mth. The surge of new supply offered occupants more choice and forced developers to adjust asking rents to more competitive levels. The average occupancy was approximately 65.2%, decreasing a mere -0.2 ppt YoY.
The total take-up was approximately 27,000 m2, increasing a moderate 10% YoY. Grade A led the market with approximately 19,000 m2, followed by Grades B and C. Increased take-up was the result of the Government’s new investment law, bolstering further demand.
In 2017, approximately 50,000 m2 will be launched from two new Grade A projects, Junction City by Shwe Taung Development & Keppel Land, and Times City by Crown Advanced Construction.
In the long term, higher occupancy levels are expected to reflect the positive sentiment created by the US’s lifting of the decades-long trade sanctions against Myanmar, fostering foreign invest-ment activities.
TABLE 1.1
Key Indicators
Macro Indicators
Area
Population (*)
GDP (**)
Registered FDI (**)
Internationalvisitors (**)
Unit
Square kilometre
Million people
US$ billion
US$ billion
Million people
Value
678,500
54.5
64.9
4.1
4.68
YoY Growthrate (%)
N/A
0.87
0.84
-48.75
52
FIGURE 2.1
Office performance, 2H/2016
FIGURE 2.2
Regional office stock, 2H/2016
0%
20%
40%
60%
80%
100%
0
10
20
30
40
50
60
Grade A Grade B Grade C
US
$/m
2 /m
th
Average rent (LHS) Occupancy
Source: Savills Research & Consultancy
Source: United Nations. (*) preliminary census result of 2016, (**) 2015 full year estimate
0
2
4
6
8
10
Bangkok Jakarta Ha Noi Ho ChiMinh
Yangon PhnomPenh
Vientiane
mill
ion
m2
Source: Savills Research & Consultancy
2H Market Review | Yangon, Myanmar
03
The total stock of three to five-star rooms in Yangon was
approximately 7,000, increasing 26% YoY. The surge was
driven by both the debut of new developments and the opening
of hotel expansions.
In the first eight months of 2016, foreign direct investment in
Myanmar’s hospitality and tourism industries reached approxi-
mately US$3 billion.
In 2H/2016, the average room rate of the three to five-star
segments in Yangon was approximately US$168/room/night,
representing a decrease of -6% YoY. The average occupancy
was 70%, increasing 2 ppts YoY. RevPAR decreased -2% YoY.
The aggregate four and five-star ARR decreased -3% YoY while
the aggregate average occupancy increased 1 ppt YoY, resulting
in the segments’ RevPAR decreasing -2% YoY.
In 2H/2016, the number of occupied rooms was approximately
4,900, up 31% YoY with all hotel grades experiencing increases.
With Yangon International Airport’s new terminal opening in March 2016, the airport’s capacity increased from 2.7 million to 6 million passengers annually.
In 2017, more international hoteliers will enter the Yangon hotel market, including Lotte, Pan Pacific and Starwood.
HOTEL
FIGURE 2.3
Hotel current and future supply, 2017 onwards
Source: Savills Research & Consultancy
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2017 2018 Onwards
No.
of r
oom
s
Existing stock Future supply
SERVICED APARTMENT
In 2H/2016, a new supply of 40 units from one existing project
increased the total supply to approximately 1,520 units, up 4%
YoY. Yangon’s current supply is only 8% of Bangkok’s and 34% of
HCMC’s.
The area around Inya Lake supplies 830 units from nine projects,
accounting for over half of total stock.
The average rent decreased -3% YoY to US$5,389/unit/mth or
US$47/m2/mth - the highest figure among analysed ASEAN cities.
It also achieved the highest occupancy among those analysed
with 89%, increasing 8 ppts YoY. The RevPAU increased 6% YoY
to US$4,772/unit/mth. 2H/2016 saw positive take-up, much
higher than that of 2H/2015.
Many future projects are the work of prestigious developers and
operators, such as: Daewoo International, POSCO E&C, Lotte
Hotels & Resorts, Shwe Taung Development, Keppel Land,
Mitsubishi Estate Co., Ltd, Yoma Strategic Holdings Ltd, CapitaL-
and, Somerset and InterContinental Hotels Group.
FIGURE 2.4
Serviced apartment stock, 2H/2016
Source: Savills Research & Consultancy
-
4,000
8,000
12,000
16,000
20,000
Bangkok PhnomPenh
Ho ChiMinh
Ha Noi Yangon
Uni
ts
FIGURE 2.5
Regional serviced apartment performance
Source: Savills Research & Consultancy
0
10
20
30
40
50
0%
20%
40%
60%
80%
100%
Bangkok PhnomPenh
Ho ChiMinh
Ha Noi Yangon
US
$/m
²/mth
Occupancy Average rent (RHS)
Please contact us for further informationSavills plc
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2H Market Review | Yangon, Myanmar
04
Yangon’s primary condominium market consists of approximately 19,300 units from 213 projects. There were approximately 6,500 available units for sale from 149 active projects.
Average absorption was 12%, increasing 5 ppts YoY as a result of newly launched projects offering greater diversity and a more effective balance of price and quality. The average selling price was US$2,670/m2, up 10% YoY. Pricing in Yangon was relatively higher than other regional cities due to limited supply and high construction costs.
The Condominium Law first published in January 2016 allows foreigners to buy condominiums in Myanmar, restricting purchases to only 40% of a building’s total units above level six.
The growing presence of international developers and the new law supporting foreign purchases has driven increased sales and quality improvements. Furthermore, with a population growth rate of approximately 2%, Yangon will begin to see greater fundamental housing demand.
More than 3,200 additional units from recorded future projects and others without clear statuses will enter the market within the next several years.
CONDOMINIUM
FIGURE 2.7
Regional condominium pricing, 2016
Source: Savills Research & Consultancy
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Yangon Ho Chi Minh Ha Noi Bangkok KualaLumpur
PhnomPenh
US
$/m
2
In 2H/2016, Yangon’s total retail supply increased 1.4% YoY due to the entrance of three new small-scale projects of less than 5,000 m2 NLA.
The average rent decreased -7.2% YoY. While department store rent showed a marginal improvement of 2.0% YoY, shopping centre rent sharply decreased -6.9% YoY due to rental reduc-tions in several projects, most notably Myanmar Cultural Valley and Shwe Taung Group’s Junction shopping centres.
The average occupancy decreased -1 ppt YoY to approximately 98 percent. Shopping centre occupancy decreases of -0.6 ppt YoY were overshadowed by department store decreases of -9.2 ppts YoY.
In 2H/2016, the total take-up was approximately 1,000 m2, down YoY due to decreases in both shopping centres and department stores.
In 2017, approximately 232,000 m² NLA from ten projects will come online, the majority of which are currently under construc-tion. The most anticipated projects are Junction City and G.E.M.S.
RETAIL
Source: Savills Research & Consultancy
FIGURE 2.6
Retail performance, 2H/2016
2H/2013
50%
60%
70%
80%
90%
100%
24
26
28
30
32
US
$/m
2 /m
th
Occupancy Average rent (LHS)
2H/2014 2H/2015 2H/2016
