There has been a pronounced correction in headline rents. Given the increase in competition and the entry of better-quality projects, landlords are now willing to lower prices to reasonable levels. In fact, older offices, which previously commanded premium rates, have begun adjusting rents appropriate to their quality and offerings. Meanwhile, despite the improvements in building standards, location remains a major consideration. Colliers suggests developers should be especially careful in the early stage of their design plans and commerciality. This should help them to meet many occupiers’ collective preferences: convenient location, flexible floor space layout, and justifiable rental rates.

Forecast at a glance

Demand
Demand continues to pick up as rental levels remain competitive. Quicker economic reforms and further market liberalisation should facilitate growth moving forward. 

Supply
Colliers expects office stock to grow with more than 75,000 sq m of new space in 2018 an increase of 17% of`the current stock. However, we expect new supply to be limited in 2019. 

Occupancy rate
Colliers expects occupancy to decline in 2018 from its current 66.7% given the upcoming sizeable stock. Occupancy should eventually pick up once the new investment law is enacted.

Rent
The anticipated improvements in the investment environment should drive rental rates to improve in the medium term. 

Click here to download the Colliers Quarterly Review - Yangon Office Report Q4 2017.

Developers Advised to Focus on Commerciality

As at the end of 2017, Yangon’s total office stock reached more than 356,000 sq m (3.83 million sq ft) of leasable space, up by 22% YOY. Recent completions are all located outside Downtown, including Pyi Nyein Thu (Pyi Nyein Thu Construction) in Mayangone Township; Golden City Business Centre (Golden Land Real Estate Development Co., Ltd.) in Yankin Township; as well as Crystal Tower (Shwe Taung Development Co.,Ltd.) and The Regency (Ever Best Hotel & Resorts Co., Ltd) both in Kamaryut Township. Colliers expects the total stock to build up further in the Inner CityZone, with Downtown only likely to witness a considerable increase upon completion of mixed-use development Yoma Central in2021.Overall, new supply in 2017 totalled 65,000 sq m (700,000 sq ft), while the estimated addition for 2018 is of similar size.

Besides projects expanding across the city, we have also observed the emergence of office units for sale. However, the practice remains in a nascent stage. In the past year, these few select projects have recorded average sales performance and Colliers thinks more time is likely until this concept is fully embraced. Meanwhile, the increasing stock in the recent years has also reflected better building designs, evident with modern projects like Sule Square and Junction City.

The improving quality is most likely to continue with future projects looking promising. In fact, we have observed certain upcoming office buildings such as Kantharyar Centre, Time City and M Tower adopting international standards e.g. curtain wall system, high floor-to-ceiling height, spacious lobby, as well as better floor plate and efficiency. Given all these recent developments, Colliers expects competition to intensify in the near to medium term. In turn, we advise developers to be strategic in their early design plans. The building quality matched with a convenient location is a key consideration among many tenants. Rental rates should similarly be positioned based on the degree of these offerings.

Click here to download the Colliers Quarterly Review - Yangon Office Report Q4 2017.

For more information on the Colliers Yangon Serviced Apartment Report or to discuss the Yangon property market phone or email Karlo Pobre from Colliers International Myanmar via the contact details below.

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