Collier: Mandalay Property Market Report 2016

Modest but continuous growth

Joshua De Las Alas Analyst | Research & Advisory

Mandalay’s property landscape is in an emerging state with better quality real estate products now slowly unfolding. Demand prospects for international standard landed residences are especially strong, while shifting consumer preferences are leading to a modern retail transformation. Colliers advises developers to focus on integrated projects that highlight a significant lifestyle upgrade in the long neglected residential market.


Forecast at a glance

  • Demand – The vast availability of land plots will facilitate further growth in the landed residential market. Strong sales take-up in view of the limited stock suggests demand will be in a lengthy upcycle going forward.
  • Supply – Condominium stock and retail stock are improving but remain limited overall. In contrast, signs of oversupply in the hotel sector are beginning to surface. Nonetheless, the positive prospects for the retail market suggest that it is set for further expansion.
  • Occupancy Rate – Mingalar Mandalay registered healthy occupancy and take-up levels in the retail and condominium components, respectively. The market should see a steady shift in preference towards modern and integrated developments.
  • Price/ Rental Rates – Average rates across all sectors remain generally stable with the exception of the upper-scale hotel market. Further reductions in rates are likely for the 4-star and 5-star categories given the strong supply pipeline.


Buyers lean towards landed residences; high-rise living still a new concept

High-rise living remains a new concept in Mandalay reflected by the limited number of condominium projects and generally slow sales activity. At present, many of the residents are accustomed to living in mid-rise apartments, mostly four to eight storeys, or in individual villas and shophouses, the majority being of inferior or average quality.

On the other hand, the preference for exclusive residences looks positive which suggests promising opportunities for developers. While a few gated communities are starting to take shape near downtown, there remains vast undeveloped land in the rest of the city suitable for medium to large-scale projects.

Since 2013, there have been a total of eight condominium sales launches in Mandalay, all in the mid and upper-mid segments. Mann Myanmar and Ngu Shwe Wah were the first to be completed, both representing the citywide stock with a total of 400 units. The rest, collectively consisting more than 500 units, are slated for completion within the next three years.

mandalay condo supply


Despite the modest rise in supply, the market is likely to witness a decline in condominium launches in the near term as buyers appear less receptive. While many of the purchases are investment-led, the rental potential is weak. The number of expatriates driving rental activities is limited compared to Yangon, while the affluent locals prefer living in landed residences. At the end of H1 2016, the citywide condominium take-up rate stood at 51%, a decline of 5% compared to the same period in 2015.

Though the performance of most pre-sales condominiums is overall sluggish, Mingalar Mandalay Condominium has turned out to be an exception. Despite being above the city-wide average rate, the project has registered healthy take-up with a monthly sales velocity of 13 units. Its location, integrated into in the city’s first master planned district, has foremost attracted buyers with intentions for either own-use or investment purposes.


Mandalay condo sales take up rate


Furthermore, the landed residences in Mingalar Mandalay have registered robust take-up as was true for another similar development located further out of town. While located north of the city outskirts, this newly launched residential enclave positions its villas as vacation homes geared toward retirees residing from the neighbouring Sagaing Region, as well as Mandalay and Yangon. The project’s relatively low price has in fact outweighed its far distance from the city centre, and the strong sales performance likely reinforced by its multiple offerings being in a mixed-use project.

In the long term, Colliers sees robust demand for gated landed residences and advises developers to introduce a wide spectrum of residential villas which target various income levels. These projects can be positioned as satellite communities featuring complementary recreational and leisure amenities (e.g. clubhouses) as well as commercial facilities considered largely limited in the city. To entice buyers to embrace the overall concept, the residences should be integrated in comprehensive master planned developments which aim for a significant lifestyle upgrade from the market’s current outdated living conditions.

Retail market ripe for modern upgrade; dedicated office developments remain non-existent

Myanmar’s economic liberation has similarly benefited Mandalay’s retail sector over the recent years. In the past, predominantly Chinese immigrants initially contributed to the trading activities, with most businesses geared towards the jewellery and precious stone industry. Today, the market remains generally cash-driven which means a high potential for discretionary spending. Service-driven businesses are now starting to grow with banks appearing in addition to the rising number of Clothing & Apparel, Fashion & Accessories and F&B shops.

Given the positive demand prospects, the total retail stock in Mandalay grew to more than 100,000 sq m of leasable space in H1 2016, up by 76% from the previous year. The rise in supply was mainly driven by Ocean Super Centre in Mingalar Mandalay, and Mandalay Yadanarpon Mall downtown. We expect the stock to reach more than 120,000 sq m by the end of the year following the opening of the Diamond Plaza expansion.


mandalay retail supply


While supply has substantially improved, recent developments continue to lag behind international retail standards, resulting in a lacklustre performance of some shopping malls particularly in the downtown area. Despite being relatively new, the average occupancy rate for these select establishments is less than 50%. Colliers thinks that the poor tenancy mix, inefficient building management and floor efficiency have driven low foot traffic, putting off many prospective tenants. Consequently, the downtown area’s occupancy rate has dropped from 54% to 39% YoY, while the average rent settled at USD25 per sq m, down by USD5 per sq m from the previous year.

In an attempt to raise occupancy, some of these retail spaces have begun conversions to multipurpose uses such as training and business centres. This has initially stirred demand, yet the overall market requirement seems low since local companies generally preferring to set up in individual informal office spaces such as shop houses, while a few foreign companies remain based in better-quality hotel business centres. No proper dedicated office building will exist in the city until the completion of Mingalar Mandalay Office Tower in the next 12 months.


mandalay shopping mall average rental rate



In contrast, the recently opened Ocean Supercentre is fully occupied. With the market ripe for upgrade, the developer moved ahead by adopting modern mall designs which eventually established strong critical mass for the whole of Mingalar Mandalay. Colliers believes that the distinct disparity in occupancy levels across the city is not a reflection of a slow demand but rather a shift in preferences towards new concepts. Consumers are beginning to patronise modern retail offerings that are similar to the rest of Southeast Asia, which local developers should start incorporating in their plans. These features may include themed central attractions, animated public realms, spacious activity centres, and open green spaces that especially appeal to families.

Addressing seasonality of hotel demand amid the rising competition

Mandalay City has benefited from the sudden influx of tourists in recent years, serving as a gateway to other tourist destinations in central and northern Myanmar. Many of the travellers stay in the city between two and three nights, setting out their next destination elsewhere in the region including the historic site of Bagan.

By the end of 2015, recorded tourist arrivals in the region exceeded 100,000 with an average annual growth of roughly 50% since 2011. Consequently, the number of rooms, including hotels, motels, and guest houses in the city alone has grown at an unprecedented rate to reach almost 7,000 – the second highest in the country after Yangon.

Meanwhile, at the end of H1 2016, Colliers has tracked a total of 13 mid-tier and upper-scale hotels translating to around 1,150 keys. The rising stock on the back of seasonal demand has led to a heightened level of competition in the past two years. Some hotel owners are now tapping international operators to boost marketability. Beside Best Western, the city will witness the debut of hotels likely to be operated by the Accor Group and International Hotel Group.

Meanwhile, signs of oversupply in the upper-end segments are starting to surface and should be more pronounced in the future that 70% of future supply is geared towards the 4-star and 5-star categories. In fact, the recent surge in upper-scale segment has already resulted into a decline in occupancy rate of roughly 5% to 44% in H1 2016 compared to the same period the previous year.


mandalay hotel average published rate


Owing to the falling occupancy rates, the majority of the upper-scale hotels have been forced to significantly cut prices. This lead to a drop in the published rates by 10% from USD311 to USD281 YoY in H1 2016. On the other hand, the mid-tier hotel segment is more robust with a stable rate of USD100 and an occupancy rate of 60%.

To address the negative impacts of Mandalay’s tourism seasonality, Colliers recommends hotel owners to work closely with travel operators and develop creative approaches to entice both domestic and foreign visitors all year round. Travel packages, through aggressive advertising, should highlight Mandalay’s physical and socio-cultural features such as events and festivals, as well as promotions of other potential natural or cultural tourist destinations nearby.


For more information:
Karlo Pobre

Senior Manager | Research & Advisory

+95 (0) 979 573 3378


Joshua De Las Alas

Analyst | Research &


Nay Aung Kyaw

Researcher | Research & Advisory


Colliers International | Myanmar

Room No. B 803, 8/F., Tower B,

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