Colliers Property Report – Yangon Serviced Apartment Supply Q3 2019


Summary & Recommendations

While the strong influx of foreign investors and expatriates has ultimately facilitated the rental activity in Yangon in the last few years, a number of companies remain challenged by the lean selection of decent quality apartments. More recently, companies are becoming more cautious in terms of managing costs, exerting downward pressure on housing budgets for expatriates. This occurrence has negatively impacted both occupancy and rental levels as of Q3 2019. The availability of smaller units in the market remains scant, driving most expatriates to incur expensive rents on larger units. This situation was mirrored in our most recent survey, demonstrating a large ratio of tenants desiring for a much lower monthly rental rate. In lieu of such, development offerings with limited services and smaller units should appear lucrative on an investment angle, tapping many companies and businesses with limited housing budgets.


When foreign investors began jetting into Yangon upon the first flush of liberalisation to promote joint ventures, set up operations, and/or acquire stakes in local corporations and businesses, most of them had to stay at premium lodgings such as serviced apartments due to the narrow selection of reasonably-priced, decent quality accommodation options available in the city.

In the past, serviced residence as an offering had not fully taken off. During the early 2000s, only a handful of serviced apartments were made available to prospective tenants. Some of these developments include Mercure Yangon (Cititel Hotel Management) which opened in 1998, followed by Marina Residence (Eden Group) a year later. A series of much newer projects such as Espace Avenir Executive Serviced Apartment by Htoo Group (2000), Golden Hill Towers by YKK (2001), and Sakura Residence by EXE Sakura (Myanmar) Co., Ltd. (2002) were similarly launched and were mostly sited in the Inner City Zone. However, in lieu of a frail and restrictive business environment back then, the flow of investments for serviced apartment projects has markedly weakened. In fact, new completions and launches have hushed for nearly eleven years. It is only in Q4 2013 that resurgence in supply (Shangri-La Residences by Shangri-La Hotels & Resorts Co., Ltd., and SOHO Diamond by Asia Express) was witnessed, enabled by the inducted economic reforms of the previous administration. Since then, Colliers saw that growth has rushed, and developers and operators have recouped their poise – as seen on the continuous record of new projects on an annual basis (See Figure 1).

At present, Yangon has an existing stock of 20 serviced residences representing a total of more than 2,340 apartment units. The figure rose by nearly 4% qoq after being subdued in the last seven months. The increase is prompted by the recent completion of 85 SOHO Premium Residence in Mingalar Taungnyunt. The 13-storey project by Mother Construction delivered a total of 88 units – all being one-bedroom with unit dimensions ranging between 65 and 70 sq meters.

In the next three months, supply is estimated to further move upwards.Colliers sees that the number will likely observe a behavior similar

to that of 2017 and 2018 wherein the tally of new projects ultimately picked up towards the latter part of each year. In Q4 2019, an addition of around 300 units of Premium (Somerset @ 68 Residences by United GP Co., Ltd.), Grade A (The Gonyi Towers by Sae Paing Development Company), and Grade B serviced apartments (The Mona Lisa Residence by A1 Construction Co., Ltd. and Wyne International Co., Ltd.) is anticipated in the Inner City Area. This led us to project a peak in annual addition by the end of 2019 – a surge that has not been witnessed in the last two decades.

In the long run, future projects such as Golden City Serviced Apartments by Golden Land Real Estate Development Co., & Nature Link Co.,Ltd., Inno City by Inno International Development Co., Ltd., HAGL Myanmar Centre Serviced Apartments (A1 & A2) by Hoang Anh Gia Lia Myanmar Co. Ltd., Junction City Serviced Apartment (formerly called Sedona Suite) by Shwe Taung Group will mostly be launched and advertised amongst the existing upscale offerings in the city. These buildings will only be launched between H2 2020 and H2 2021. For such period, Colliers estimates that there are now close to 1,700 units in the pipeline. This is expected to build up as more projects are revealed. However, slow-moving planning and sluggish construction activities in some developments may continue to cause delays in the projected pipeline dates.



The citywide occupancy rate hit the sub-75% level for the first time after hovering above the 80% mark over the last six months. The figure is down by 6.3% and 12%, on a quarter and annual bases, respectively. Looking closely, sizeable falloffs were mainly observed in Grade B serviced apartments such as Star Residence, Residence G, Northern Inya Serviced Apartment, and Khin Sabe Oo Residence. Double-digit declines were similarly witnessed in high- tier projects such as Mercure, Shangri-La Residences, Golden Hill Towers, and Sakura Residence. As explained by some of the sales representatives from the mentioned developments, the rental activity during the reviewed quarter is relatively stagnant, highlighted with come-and-go tenants. While the short-term demand from Asian business travelers helped offset the momentary drop in occupancy, a lack of new inquiries from long-stay guests significantly contributed to the overall sluggish performance. Moreover, work contracts of most foreign expatriate tenants have ended during such period. With reference to the consultations and dialogues conducted with some of these tenants, it can be observed that there has been a continuing trend of shorter leasing contracts in serviced apartments particularly because MNCs, in an attempt to cut costs, are transferring employees to Yangon for shorter secondments.

Colliers see project differentiation and price adjustments to remain central in warranting that demand is well-sustained. Henceforward, we continually encourage developers to explore investment opportunities in building more limited and mid-tier serviced residences that offer smaller-sized units (units that has an average ranging between 0 and 70 sq meters). It is important that these units are marketed at a competitive rental rate.

Correspondingly, most of the projects in the city have further reduced their rental prices. Adjustments hovered between 2% and 8% qoq across all configurations except studio rooms. On an annual basis, two-digit declines were observed, primarily in one-bedroom (-20.8%), two-bedroom (-15%), and four-bedroom (-13%) units. Meanwhile, there are few serviced apartments that chose to maintain their existing rates and have opted offering various rental concessions instead to entice prospective occupants – both for individual and corporate residents. Although there are some that have managed to keep rental rates unchanged, it is still tough to get tenants in the current softening rental market. Landlords and operators are typically open to negotiations and reducing the rental rate. In order to keep the units occupied, landlords are willing to offset a reduction in rental rates with a long-term lease. Based on our findings, real transaction rates could be reduced by between 10 and 20% from the published rental rates.

Colliers advises operators to start offering more flexible leasing contracts and payment arrangements to entice tenants, allowing for short-term stay. Previously, most serviced residences require a minimum lease term of six months paid in advance. Recently, few landlords are offering monthly accommodation that can be paid monthly.

Now that most companies are focused on cost-effective selections and in view of the increasing supply, rental rates are likely to become more competitive. Furthermore, the entry of better-quality developments may exert downward pressure on rental rates on poorly maintained serviced apartments, unless refurbished.

Source: Colliers

For more information , please contact :

Paul Ryan Cuevas
Senior Analyst | Research Myanmar
+95 0 9 960 381 584








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