According to Colliers International Myanmar's latest condominium Q3 report, there was a slight improvement in sales over the past three quarters with developers offering discounts at around 30-40%. This is beside the lack of new launches which altogether resulted in a modest 2% increase in the take-up, quarter on quarter.

At a glance:

• Sales have improved over the past three quarters with developers offering discounts
• Fewer new launches resulted in a modest 2% increase in the take-up, quarter on quarter
• This strong performance is temporary and will prove financially unsustainable in the future
• Inventory of upscale projects is considerably outpacing demand
• Buyers are becoming cautious with a more conservative approach
• Colliers urges developers to address affordability issues by introducing competitively priced products 

“While this appears to be a positive result, the performance is actually temporary, and keeping such a strategy will prove financially unsustainable in the future” according to Karlo Pobre, Associate Director for Research and Advisory at Colliers International.  The report further recommended that developers should look long term by generally addressing concerns over affordability. Mr. Pobre added that this should be reinforced with other fundamental drivers such as access to financing tools i.e. bank financing with reasonable terms; improvements in the currently onerous car parking regulation; and the enforcement of the long-overdue condominium law.
 
Condominium prices in Yangon ranged between USD147,000 and USD699,000, from a mid-market to a luxury category. The report mentioned that though there are capable buyers and investors for upscale projects, the inventory is considerably outpacing demand and that the buyers are now becoming cautious with their selection process, adopting a more conservative approach than in the past.
 
“We urge developers to address issues around affordability by introducing competitively priced products, starting with acquiring reasonably priced land. In particular, site selection can be geared towards alternative and accessible development sites in the immediate outskirts of Yangon. With these areas of appropriately priced land, devising offerings for mid-tier satellite communities ought to be a viable strategy.” said Joan Mae Lee, Research, and Advisory Analyst for Colliers International.
 
Colliers believes that other than the generally high cost of development such as land and construction costs Yangon’s steep condominium prices are driven by an overall mix that is geared towards larger unit sizes. Developers are continually deterred from offering smaller sized units given the onerous carpark regulation. Colliers has compared Yangon to other cities in Southeast Asia and described that unlike in some cities in the ASEAN region, Yangon’s carpark space requirement, which is 1.2 carpark spaces for every unit, is calculated based on the total number of units rather than the overall size of the condominium building. “With this type of configuration more smaller units means more parking spaces, so developers are forced to offer larger sizes which in turn are priced high. For instance, a typical two-bedroom unit in Yangon is priced at almost double the average of Bangkok, Manila and Jakarta,” commented Ms. Lee.

If you would like further information about this report, email Karlo Probre from Colliers International Myanmar via the contact details below.

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