Colliers International Q4 2017 Yangon Office Report revealed that the average headline office rents dropped for the first time in nearly five quarters. This, from a previously stable rate of USD 45 per sq m per month down to USD 43. The correction in prices was mainly attributed to older office buildings lowering prices. In particular, these buildings which previously commanded premium rates have cut down rates to as much as 25% QOQ given the increase in competition, according to Ms. Joan Mae Lee, Analyst for Research and Advisory at Colliers International Myanmar. “Despite the declining trend, we still see this as a normal occurrence and merely a correction given the previously low supply base.” added Ms. Lee.

According to the report, the total office stock reached more than 356,000 sq m as at year-end 2017. New additions were all located outside Downtown with developments such as:

• Pyin Nyein Thu in Myangone Township
• Golden City Business Centre in Yankin
• Crystal Tower in Kamaryut township
• The Regency in Kamaryut township

Paul Ahlgrim, Senior Manager for Colliers’ Real Estate Services commented, “We expect stock to continue to build up in the Inner City Zone, with Downtown only likely to witness a considerable increase once Yoma Central is completed in 2021”.

Colliers also noted offices for sale as a new trend in the market. “Though the concept remains in its early stages, these few select projects have recorded average sales performance and I believe that it will take some time before the practice is fully embraced.” said Mr. Ahlgrim. Other notable trends in the market include the improving quality of developments evident in modern projects like Sule Square and Junction City.

Demand has remained strong despite the sizable additional stock in 2017 according to the report. “In line with our previous forecast, net annual take-up sustained healthy levels reaching close to 60, 000 sq m, almost equal to that in 2016. This is driven by the continuous “flight to quality” and partly by some business expansions.” commented Ms. Lee.

Despite this, Colliers expects competition to intensify in the near to medium term, especially with the entry of promising developments such as Kantharyar Centre, Time City and M Tower. These projects are observed adopting international standards such as curtain wall system, high floor-to-ceiling heights, spacious lobbies and better floor plate and efficiency. “We advise developers to be strategic in their early design plans. Building quality matched with a convenient location are key considerations among many tenants, as well as having reasonable lease rates relative to the development’s positioning.” added Ms. Lee.

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