Collier Property Report – Mandalay PROPERTY MARKET 2017

Key Strategic City on the Rise

Getting its fair share of modern developments, Mandalay’s property market is moving ahead, while the growth potential remains promising. In fact, master-planned development is seen as an attractive concept, and Colliers predicts more developers are likely to join the bandwagon. We advise future projects to offer an upgrade in terms of living quality. Products may also be geared towards gated landed residences reinforced with retail and other supporting components. Meanwhile, the recent rise in flight frequency as well as foreign arrival numbers also bode well for the hotel and tourism industry. Given the region’s rich historical background and eco-tourism potential, Colliers recommends hoteliers to offer tour packages that maximise travel experiences through excursion trips and outdoor activities.

Forecast at a glance


Large vacant land plots will continue to reinforce Mandalay’s strong property growth potential. Prospects for landed residential is promising; while the lack of modern, family-oriented shopping malls suggests opportunities for retail expansion.


Condominium stock substantially improved whereas upper-scale hotel supply is set to expand in 2018 with more than 1,800 units. Conversely, we expect retail supply to appear limited in the medium term.

Occupancy & Sales Take-up Rate

Heathier occupancy and sales take-up rates were recorded for both retail and condominium sectors. On the other hand, Colliers thinks a probable decline in hotel occupancy is likely given upcoming sizeable stock.

Price/Rental Rates

We see competition from mid to upper-scale hotels further exerting downward pressure in ADR, albeit at modest levels. Meanwhile, retail rents are projected to increase between 3 and 4% YOY.


Condominium market in a ‘go-slow’ road; promising demand for landed residences


Myanmar’s economic liberalisation has paved the way for the entry of modern condominiums over the past years. However, despite the rapid pace of urbanisation, low and mid-rise buildings still predominantly define urban living in key cities; while affluent locals still opt for landed residences, especially detached villas over high-rise developments.

In fact, Colliers believes that the market for horizontal residences is promising in Mandalay City, backed by its vast developable land. For that reason, we expect these vacant plots to provide more positive prospects for developers in the future, worthwhile for their medium to large scale master planned projects.

Mandalay Condominium Supply (No. of Units)

In spite of strong demand observed for landed residences, developers remained focused with introducing more condominium projects, perhaps an attempt to imitate Yangon’s previous success.

In fact, as of 2017, the total stock of notable condominiums reached more than 500 units, up by 46% YOY. The increase is driven by newly completed developments namely Khayay Condominium by Asia Bright Land and Sky Villa Condominium by NTL Construction Group, collectively representing 267 units. All of which is in the Inner City zone. This area’s development is also building up and will be reinforced with upcoming sizeable condominium projects, such as Mingalar Mandalay, MICT Condominium, and Mandalay Convention Centre & Commercial Complex (MCCCC), all by New Star Light and C.A.D. Construction Co. Ltd. Moreover, the existing number of condominium units in the Inner City Zone reached more than 200 units, almost equal to that of downtown. As for the Outer City Area, condominiums remain non-existent. Overall, Colliers expects more than 500 units slated to complete within the next two years.

Mandalay Condominium Unit Configurations

Meanwhile, the latest condominium unit mix leaned further towards the two to three-bedroom configurations, representing almost 95% of the market. The intended design for larger units perhaps stems from the perceived preference towards end-use purposes, mainly from families of double household size. Meanwhile, demand for smaller units, which tends to be investment led, is still quite limited. The rental potential is relatively weak given the low expatriate numbers in the city; while the current rents are considered high over the existing income levels.

The average selling prices remained relatively modest at almost USD1,400 per sq m. Despite the competitive rate, most developers continue to offer extensive marketing promotions with prices discounted at considerable levels. In turn, it has resulted in a boost in sales even with the upswing in new project launches. As at the end of 2017, the cumulative take-up rate ended at 60%, up by 5% YOY.

While recent sales number appears positive, Colliers sees the discounting scheme unsustainable in the long run. In its place, we advise developers to focus on improving the quality instead and eventually offer products at justifiable prices. Moreover, given that many family end-users are accustomed to living in low to mid-rise buildings, we suggest condominium developers to adopt and enhance this offering. Specifically, future projects should be envisioned as low to medium density, a concept that appears to generally weave in the city’s natural landscape. Apart from integrating quality facilities, we put emphasis on using generous open spaces reinforced with greenery and impressive landscaping, among others.

Mandalay Condominium Sales Take-up Rate

On the other hand, residential villas, which offer more privacy and security, remain the generally preferred residence among more affluent families. With integrated developments gaining increasing attraction in Mandalay, Colliers sees promising demand for gated residential communities, ideally in master planned and mixed-use developments. To attract buyers, the value proposition should gear towards an upgrade in lifestyle. Adding a clubhouse element designed with well-appointed amenities and facilities would similarly be an effective marketing tool. More so, integrating a retail component will enhance the project’s offering as well as create further critical mass.


Retail upgrade boost needed; office market potential still unrealized

Mandalay, being the second largest city in Myanmar, houses a population of more than 1.2 million. Within this city lies a growing number of lower-middle to middle-income consumers willing to increase expenditure on consumer goods. In a recent Deloitte consumer survey1 conducted in the cities of Yangon and Mandalay, more than half of the respondents intended to increase their expenditure by at least 10% for the year ahead. Colliers thinks that these consumers, accounting for the largest share in Myanmar, have the potential to become a very profitable segment. In fact, the middle class consumers is projected by The Boston Consulting Group to double in size in 20202. The manifestation of this continuous rise is likely to fuel growth across the full range of consumer products and retail categories in Mandalay.

In turn, Colliers sees promising potential for retailing activities in the city going forward. However, despite these favourable fundamentals, both existing and future supply appear limited.

As of 2017, no new retail developments were recorded. The total stock in Mandalay was unchanged at more than 120,000 sq m of leasable space. Diamond Plaza Phase B by Mandalay Golden Wing Holding Ltd., and Gandamar Shopping Centre in downtown were the most recent completions, both opened in Q3 2016. The retail stock will remain the same until the completion of Mandalay Convention Centre & Commercial Complex (MCCCC) in Q4 2019, representing more than 11,000 sq m of leasable space. Meanwhile, shopping malls in the Outer City Zone are still non-existent and department stores elsewhere remain limited.

Mandalay Retail Supply (Gross Leasable Area)

Following the limited stock, the citywide occupancy rate considerably increased to 60%, up by 15% YOY. Mandalay Yadanar Mall, which recorded a 70% occupancy, and Shwe Phyu Plaza, now fully-occupied, led the overall improvement. Yet, some poorly maintained retail centres witnessed considerable declines to as much as 30%. Colliers believes that major renovations and design face lifts are necessary for these retail centres. This should eventually be reinforced with an effective property management.

Mandalay Shopping Mall Average Rental Rates

Noticeably, there is a need for Mandalay’s retail market to adopt global practices. Colliers advise developers to shift from the typical box-type malls to a more modern architectural design. We also think that the introduction of lifestyle-oriented centres in the city will likely stir demand. Given the lack of recreational activities especially for families and among the growing young population, we recommend developers to start integrating entertainment facilities and activities in their malls. These could include value-added elements like movie theatres, gaming arcades, playgrounds, theme parks, health and wellness hubs, activity centres, etc. Notwithstanding all these, developers still have not recognised these options. At present, many large retail occupiers, though conveniently located along major commercials roads, are settling in to poor-to-middling quality buildings.

Given the absence of dedicated office developments in the city, some retail owners opted to convert their spaces to multiuse purpose instead. Still, the majority of local offices in Mandalay still operate in retail units, shop houses or apartments, being largely present in both Downtown and Inner City zones. These unconventional offices, considered mediocre in quality and lacking proper utilities, charge rental fees ranging from USD 15 to USD 30 per sq m per month. Within the next two years, we expect the city to have its first two dedicated commercial office buildings to be located in the mixed-use developments Mingalar Mandalay and Mandalay Convention Centre & Commercial Complex (MCCCC). With many companies still unaccustomed to high-rise buildings, Colliers sees opportunities for a campus-type office instead. We recommend that for future integrated projects, these typically mid-rise office complex, can also be strategically clustered next to retail shop houses, and still present an overall conformed development theme.


Differentiation: Key to Mandalay’s Seasonality Hurdle

Apart from the city’s favourable investment potential, Colliers also sees positive opportunities in Mandalay’s hotel and tourism sector. With the growth of international tourist arrivals in Myanmar over the previous years, Mandalay City has evidently benefited from it being the gateway of travellers to other tourist destinations within Mandalay region, including those located in central and northern Myanmar.

In fact, the latest data from the Ministry of Hotels and Tourism revealed that as at the end of 2016 Myanmar fiscal year, Mandalay’s flight frequency reached 1,700 flights, up 14% YOY. More recently, approximately 430,000 tourists visited the region during H2 2017, up by 13% from the same period in 2016. Though the increase takes into strong consideration of the presence of Bagan, the launch of new tourist destination sites and new international flight routes facilitated the improvements in arrival numbers. It was also reported that Mandalay’s regional room count — comprising hotels, motels, and guesthouses — has been on an upward trend. As at the end 2017, there were more than 7,700 hotel rooms and 590 guest houses recorded in Mandalay City, up by 6%YOY.

Mandalay Upper-scale Hotel Supply (No. of rooms)

Meanwhile, no new sizeable mid-tier or upper-scale hotel projects were noted in 2017 as tracked by Colliers. Since the completion of The Link 78 and 83 Boutique Hotels by Eden Group in Q4 2016, the supply has remained at 1,242 rooms. However, for the subsequent year, six new projects are anticipated to complete, collectively representing more than 1,800 rooms.

As for Mandalay’s upper-scale hotel demand, it still maintained its seasonal trend wherein tourist arrivals only surge during the dry months of October to April. The months of July to August are considered the rainiest in the country with tourist arrivals tending to decline. However, Mandalay’s weather condition appears to be more favourable than in Yangon. In fact, according to the 2017 Department of Meteorology and Hydrology statistics, Mandalay recorded more than 200 millimetres of rain during these wet months, only a quarter of Yangon’s precipitation count. Nevertheless, as of end-2017, the occupancy rate for upper-scale hotels recorded wide ranges of between 20 and 50% as well as 70 and 90%, during the low and high seasons, respectively.

In addition, given the region’s tourism seasonality and the rise in competition, hotels in Mandalay City witnessed continuous decline in the average daily rates (ADR) albeit at a lesser degree than in 2016. The mid-tier and upper-scale hotel rates decreased by 5% and 4% YOY, respectively. The entry of more modern hotels in 2018 could possibly exert further downward pressure on the daily rates for older upper-scale developments. The ADR are likely to become more competitive as supply becomes considerable within the next two years.

Mandalay Hotel Average Published Rates (USD)

Colliers urges hotel developers to push for differentiation in terms of both services and offerings. Given the seasonality circumstance in Mandalay City, creative marketing solutions are also essential. In fact, with Mandalay’s rich historical and eco-tourism potential, hoteliers should promote tour packages that maximise guest experiences. These can be in a form of excursion trips such as in heritage and cultural sites as well as outdoor activities including biking, camping, park and trail touring etc. In general, these also help extend lengths of guest stay. Similarly, there is a need for many hotels to start modernising technologies and facilities. Some examples are using up-to-date communication system, upgrading in-room amenities, and enhancing furnishings and decorations to name some.

Source : Colliers International Myanmar

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Associate Director |
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