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Myanmar Property Market

2017Prices continue to drop in the Myanmar property market as a dramatic oversupply in all categories of Yangon real estate persists!  In our update for previous years, extreme prices were common – $8psf for office space, and $5500/mo+ for quality apartments.  With the opening of so many new real estate projects of all types – malls, hotels, condos, and offices – key industry trend measures such as purchase prices, rental rates, occupancy levels, and average daily rates are at almost unbelievably low levels(for this market), with more downward pressures expected as several mega developments open in the coming months.

Increasing Supply Means Decreasing Rents across Yangon

Increasing Supply Means Decreasing Rents. (Chart via Colliers International Myanmar)

The lifting of U.S. Sanctions has also opened up access to a few key building that were previously on the blacklist.  In short, it is STILL a great time to be an occupier/renter seeking new spaces.  Expect  to see rent prices continuing to drop in 2017 and 2018.

Until recently, real estate was one of the limited numbers of wealth management vehicles in Myanmar, and most developments were locally-owned. Under Western sanctions that prevented interaction with international banking and capital markets, successful business persons in Myanmar stored their wealth in land and buildings. They regularly bought and sold land assets, like institutional investors in the west would buy and sell blue chip stocks and mutual funds, with speculation driving up prices. The price of land further skyrocketed as the suspension of western sanctions became reality, and foreign developers were priced out of the market.

  • Current high end office space lease prices exceed the Bangkok market, but prices are dropping. Premier towers in the Yangon Central Business District leased unfurnished space for almost $8 per square foot per month in 2014, compared to less than $3 per square foot in Bangkok Grade A office tower.  In 2017, however, those Yangon Grade A prices are now below $5.00psf across the city.  You can even find deals in the $2-$4 range for new, quality buildings.

    Serviced offices now exist on all sides of the city, and pricing is flexible as more spaces open up.

    Some companies still convert villas and condos into offices, though as commercial spaces drop in price this may become less appealing for large corporations.

    Office towers no longer have full occupancy, primarily because there is too much new space in the market – the amount of rent-able office space effectively doubled each of the last two years.

  • Serviced Apartment Towers are generally expensive (upwards of $7000 for a 3br unit) and the larger units are nearly fully-booked.  Several new, smaller towers have opened in recent years, which offer fantastic new options.

    High end villas, concentrated in Golden Valley neighborhood but also dispersed across the city, can be excessively large (more than 10,000sqft in some cases) but are dropping in price as the general real estate market presents increasing amounts of alternatives.  Don’t get too excited, though, as this market is coming down from prices near $2.00 per square foot per month, or more than $15,000/mo in some cases.  Don’t call Yangon cheap, yet, but we are getting closer each year.  2017 could be it.

    Several gated communities have been established on the edges of Yangon, though these require a significant daily commute to work (though efforts continue to reduce that commute, including new bridges and overpasses, and rumors of river ferries).

    Condominiums and apartments must be sourced unit-by-unit across town; and quality varies widely.

    Few heritage buildings in downtown Yangon have been renovated recently and offer limited amounts of high quality residential spaces.

  • Landowners generally demand a one year lease with full payment in advance for private spaces, though shorter leases are being negotiated now in the face of increasing competition.  Commercial spaces need 1-3 year initial commitments.  Longer term leases are also possible, though there are limited amounts of legal protection for extended lease periods, even when prepaid, and the type and size of investment involved affects the duration. Tenants are generally responsible for upgrading existing spaces to meet their standards, and agents and agencies collect a one month fee from the tenant for each negotiated lease.

    In this market, condominiums describe an apartment in a building with a lift/elevator; an apartment has only stairs.

    Foreigners are still prohibited from owning property, though a few have opted to work through nominee structures. A majority of the land in Yangon is owned by the government but leased to Myanmar landlords for various lengths of time.

  • We have a significant advantage in the market, as one of our partner companies has more than 20 years of established landowner relationships, giving us access to the finest properties and best lease terms and rates.

    Based in Yangon and operating exclusively within Myanmar, we spend 100% of our time investigating this market, looking at building quality, asking prices and negotiated prices, lease terms, owner relationships, developer reputations, and new projects. We see it all and can translate that into usable information for your firm.

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