Colliers Property Report – Myanmar Service Apartment Quarterly Q4 2018


Competition is anticipated to gradually intensify as supply is estimated to double in the next two years. This will perhaps be more noticeable in the upscale segment. Meanwhile, the entry of higher quality projects in 2018 has already driven rents towards more competitive levels. Despite the price correction, affordability remains a key concern amongst mid-level professionals, especially single and couple expatriates.

Overall, Colliers still sees strong untapped demand for modern quality limited serviced apartments and dedicated apartments for lease. There is similarly a notable shift in the overall unit mix favouring one and two-bedroom units. Hence, we urge developers to focus on these segments instead.


Expatriate housing requirements should continually increase in the next two to three years. However, there remains widely untapped demand for lower-tier but modern quality serviced apartments.


The aggregate supply stock reached more than 2,240 units, up by 14% qoq and 16% yoy. Colliers expects the surge of upscale developments between 2019 and 2021.


The considerable rise in upscale developments should exert downward pressure on overall occupancy going forward.


Rents are becoming competitive but remain generally high. We expect the downward correction to become more pronounced starting 2019 as new supply heightens.


The completion of Kantharyar Serviced Residences by Asia Myanmar Consortium Development Co., Ltd. and the extension of Clover Suite Royal Lake by Clover Group in Q4 2018 led supply to rise by a substantial 14% qoq. On an annual basis, the number is similarly up by 16%, driving the total stock to exceed more than 2,240 units.

Figure 1: Yangon service apartment stock, (units)

Source: Colliers International

Looking closely, in terms of classification, majority of the existing projects are still considered upscale, accounting close to 70% of the total supply stock. Amongst these, Shangri-La Serviced Residences and Lotte Serviced Apartments are categorised as premium standard. In fact, the latter’s introduction defined a new scale for high quality offering in Yangon. In terms of location, the bulk of supply is still found in the Inner City Area while the rest is positioned in the Outer City Area (See Figure 2). The supply share in the Outer City area improved noticeably in H2 2017 following the completion of Lotte Serviced Apartments which represents roughly 16% of the total current stock.

Figure 2: Yangon serviced apartment stock by location, (units)

Source: Colliers International

Over the course of two decades, the aggregate supply stock grew at a compounded annual growth rate of 13% and is projected to further escalate by 16% in the next three years. In fact, around 10 projects are scheduled to complete between 2019 and 2021, translating to more than 2,400 new rooms. By H1 2019, we expect the completion of three projects namely Somerset @ 68 Residences by United GP Co., Ltd., The Mona Lisa Residence by A1 Construction Co., Ltd., and The Gonyi Towers by Sae Paing Development Company. Collectively, these projects will account for an addition of more than 300 rooms. However, upon the completion of the mentioned developments, we expect a limited entry of supply in the next eight months. By then, Yangon will only witness a supply surge until the completion of The Loi in Q2 2020.

Overall, Colliers still sees a vastly untapped market for lower-tier but better-quality projects. Given that most of the future supply remains geared towards the upscale segment, this should pose opportunities for both developers to continually diversify their offerings into more competitively priced products. Specifically, we expect smaller-scale developments of basic but functional features to gain better traction moving forward.


The entry of foreign investments and expansion of local businesses has led to a strident rise in expatriates over the past decade. While this has encouraged strong rental activity in the residential market, many firms still face constraints, given the inadequate selections of decent quality apartments, and the high rental costs associated with most existing serviced residences in Yangon. However, the past five years have seen the emergence of lower-tier but quality serviced apartments. The initiative has surfaced as developers attempt to address the underserved demand for smaller-sized units due to the requirements coming from entry and mid-level foreign professionals.

Figure 3: Yangon serviced apartment stock (by unit configuration)

Source: Colliers International

More recently, the additional supply delivered in 2018 has exerted considerable changes in the citywide unit configuration. As at the end of Q4 2018, the inventory for studio unit grew the most out of all room types, up by 39% yoy. This is followed by the two-bedroom category, delivering the highest addition of more than 160 units, up by 29% yoy. In terms of supply share, the one-bedroom category remains the leading configuration in the tally.

Since Q4 2017, the two-bedroom stock has been settling at sub-600 units (See Figure 3). Back then , such unit type only accounted to 29% of the aggregate supply stock. However, the recent completion of Kantharyar Serviced Residences by Asia Myanmar Consortium Development Co., Ltd. and the extension of Clover Suite Royal Lake by Clover Group heightened the supply, leading such category to surpass the 30% mark in terms of market share. At present, the two-bedroom unit represents 33% of the total supply, just a percentage lower than that of one-bedroom (See Figure 4).

Figure 4: Supply share of each unit configuration

Source: Colliers International

As we see it, it would be favourable for developers to take particular interest in building more limited or mid-tier serviced apartments that offer smaller sized units such as studio and one-bedroom units offered at competitive rates. As observed in most Yangon serviced apartments, studio units are generally almost fully occupied, while the one and the two bedrooms lease faster than the remaining others. Colliers sees demand to continually lean towards these unit types, evident from the healthy performances of few serviced apartments such as Northern Inya Residence. Overall, the citywide occupancy has remained generally healthy over the past quarters. However, as expected, a 5% yoy drop occurred in Q4 2018 following the recent entry of new supply. Further downward movement in the first half of 2019 is probable given the surge in future supply. However, the forecasted decrease is likely temporary as supply weakens in H2 2019.


The entry of new projects commanding competitive rates has forced existing developments to lower prices. In fact, as of Q4 2018, average rental rates for one-bedroom, two-bedroom, and four-bedroom categories further declined. On a quarterly basis, the highest decrease was recorded in one-bedroom unit, recording a 7% decline in rental rates. As for the other mentioned room types, drops hovering between 3% and 5% were witnessed.

Table 1: Yangon citywide lease rate

Source: Colliers International

Although upscale developments have observed limited price movements, the anticipated rise in competition should exert downward pressure on rental levels in the next two to three years. In the meantime, Colliers expects overall rates to further correct downwards in H1 2019, and to increase modestly from H2 2019 – H1 2020 as supply pipeline gets thinner. As such, we advise future developments to be more discerning with their construction cost and cautious with their rental projections.

In general, developers are advised to continually strategize and configure their projects’ room designs towards smaller units. Besides addressing affordability, the recommended configuration will remain suited to the current demand coming from single and couple expatriates. Likewise, it should help avoid potential competition from upcoming larger condominium units, likely to be offered for lease.

For more information, please contact:

Deputy Managing Director| Myanmar
+95 (0) 979 573 3378
[email protected]

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