Colliers Property Report – Yangon Serviced Apartment Q2 2019


Summary & Recommendations

Since the government commenced a series of economic transformations in 2011, the city has witnessed mounting investment interests coming from numerous companies and institutions. The influx of international companies has ultimately driven foreign manpower requirements skyward. This growth has greatly encouraged strong rental activity in the residential sector, specifically in the serviced apartment market. With the immense interest of the government in further liberalising more sectors, corporate housing requirements is seen to rise in 2020 onwards. Given such and on the back of the competition that is set to intensify in the coming years, both developers and operators are advised to remain strategic with their plans. Piloting due diligence would be an ideal move in order to provide offerings that are matched to the housing requirements of this market’s key demand propeller – the expatriates.


Several developers and contractors have reported deferrals in their respective projects. Some of the specified reasons for the overruns include delays in land acquisition, delays in equipment assembly, fund constraints, change in the scope of work, cancellation of tender, slow progress of civil works, escalations in costs, and most especially, prospecting of competition.

Given this, new projects remain muted. Initially scheduled last quarter, 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 were all moved for completion in H2 2019. All together, a meager addition of more than 300 rooms will be delivered.

Though, once these Inner City developments are launched,  a limited entry of serviced residences in the next three months is likely. This means that Yangon will only witness resurgence in Q2 2020. For the said period, another two Inner City projects – The Loi by Loi Seng Kham Co., Ltd. and Golden City Serviced Apartments by Golden Land Real Estate Development Co., & Nature Link Co., Ltd. – will be introduced.

Nonetheless, the overall supply is still seen to grow by twofold in end-2021. In fact, Colliers sees more developments emerging in the Inner City area, delivering approximately 50% of the overall addition. In fact, HAGL Myanmar Centre Serviced Apartment by Hoang Anh Gia Lia Myanmar Co. Ltd. is seen to represent most of the future supply with estimated 360 units under its flagship in Bahan Township. The Outer City is similarly foreseen to double its current stock by 2021, with more than 740 units coming from the development of Inno City in South Okkalapa Township. Meanwhile, Downtown supply will see resurgence as Shwe Taung Group commences Junction City Serviced Apartment in Pabedan Township.

Although future projects are sizeable and promising, most of these developments are likely to be delayed or postponed further. While this line of strategy is deemed unsustainable, Colliers sees the “wait and see” tactic to become more apparent in the coming years as developers and operators revisit their plans in lieu of the foreseen competition in the next few years especially in the upscale tier.

As frequently advised, It would be ideal if investors conduct their respective market intelligences. In essence, it is only by knowing and matching the housing demands and requirements of the market’s major demand driver – expatriates – that these key players will be able to strongly position themselves in the anticipated competition.

In relation, Colliers recently reached out to a number of expatriates across the city and requested them to fill out an online survey. The said survey consists of series of questions that is aimed at understanding the housing intentions, sentiments, and considerations of these foreign workers. For this report, Colliers developed a general serviced apartment preference survey to show an overall estimate of market needs and wants. Select interviews were similarly conducted among respondents to gain more in- depth market insights.

Below are some of the findings that both developers and operators must ponder on:

  • When asked regarding the current housing facility, majority of the respondents were reportedly residing in either branded or non-branded serviced apartments (See Figure 2). Looking closely, these respondents are from the Asian source market (57%) and are mostly within the age range of 30-40 (52%).

  • Regarding key considerations in choosing a serviced apartment, a number of respondents (36%) placed the highest regard on facilities and amenities, followed by location (24%) and price (22%).

In this survey, respondents were asked to rank the level of importance of the enumerated facilities, amenities, and services available in a serviced apartment. Results have shown that respondents place an integral value on basic offerings such as swimming pool, gym and fitness centre, back-up generator, and 24-hr security and on-call maintenance. Colliers expects the entry of more international standard facilities and amenities to be offered going forward as new developments come online within the span of two to three years. The services will most likely be of better quality with reputable operators to manage these residences. Hence, it is reasonable that outdated developments should start upgrading and updating in-room amenities with focus on design efficiency and modern functionality.

Exterior facelifts as well as refurbishments to common areas and facilities will likely also help reinforce the marketability of these properties.

Meanwhile, ‘Near work’ scored the highest in terms of location preferences. ‘Near school’ came in last as there were only a few household expatriates in the profile – same is expected in the current condition of Yangon. Drawing from this result, it would be ideal if developers consider repositioning their product lines and take advantage of the untapped demand from single expatriates looking for more limited serviced apartment offerings.

Personal monthly rental budgets and aspired rental ranges were similarly enquired. Noticeably, 33% of the respondents set a monthly rental budget within the USD3,000-USD5,000 range, which is currently the average rent for a 1BR and 2BR in Yangon. This is immediately followed by a group of expatriates with a rental budget below USD2,000 (29%). As for the rental rate preference, nearly 45% favored having a rental rate below USD2,000. Note that this specific analysis is subject to bias given that respondents would ideally choose lower rates. However, a sizeable share (24%) of expatriates who prefer a rental range of USD3,500-USD5,000 was similarly recorded. When asked about the reason for choosing such budget, few explained that the average monthly rental rate for their preferred bedroom configuration is realistically within such range.

  • In relation, majority of the respondents favored either one-bedroom or two-bedroom units that have an average size of 40-70 sq meters. In terms of room fit-out, 56% of the respondents desire a modern minimalist design.
  • When asked about the preferred development grade of serviced apartment, 44% chose Grade B. By Colliers standards, Grade B serviced apartments are low- tier residences which has limited amenities, facilities and services; and which requires add-on fees for other services (laundry, in-room services, daily breakfast, daily cleaning etc.). In line with our previous predictions, we expect limited serviced apartments that provide fewer facilities but are still considered adequate and of modern quality to gain more grip amongst expatriates.

Overall, Yangon expatriates is and will remain a major demand driver of this market. Hence, investors must align their development strategies accordingly with their housing considerations. Now that relocation and mobility has become more pronounced as a key strategic initiatives amongst foreign companies, demand for expatriate and corporate housing is expected to further grow in the coming years. On a larger scope, this trend should be strongly buoyed by the continuous exertions being taken and implemented by the government. As more key investment industries get liberalised, occupancy and take-up rates should similarly pick up going forward.

In the meantime, as of Q2 2019, the citywide occupancy rate settled at the 80% mark. We anticipate a further upward movement towards the end of the year given the limited supply. Meanwhile, rental rates modestly declined. In fact, few operators compressed their rental rates as of this period despite the absence of new projects. Rental rates across categories declined by 3.5% qoq on an average. Although Colliers is witnessing minimal price movements amongst upscale developments, the rise in competition in the next two to three years should exert further downward pressure on rental levels.

Primary Author:

Paul Ryan Cuevas
Senior Analyst | Research | Myanmar
+95 0 9 960 381 584
[email protected]


Source: Collier


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