Colliers International Myanmar reports that Yangon's retail landscape performed well in Yangon Retail Quarterly Review Q1 2018, with an annual growth of 5% in terms of total retail stock.

At a glance:

• Yangon's total retail stock grew by 16,000 sq.m. (172,223 sq.ft.) of leasable area, a 5% increase YOY.
• Supporting retail projects represent over 10,500 sq.m. (113,021 sq.ft.) of leasable area.
• Shopping centres brought in only 38% of the overall added stock. 
• 2018 completions expected to total close to 71,000 sq.m. (764,237 sq.ft.)
• Q1 2018 saw a marginal decline in city-wide occupancy rate but remained above 90%.
• Average rental rates remained at USD 32 per sq.m. per month.

Click here to view Yangon Retail Quarterly Review Q1 2018.

The Htet Oo, Research and Advisory Manager for Colliers International Myanmar, advises that the growth of Yangon's retail stock was driven by the completion of four new developments, half of which are supporting retail components located in the Inner City Zone; while the other two are shopping malls situated in the Outer City Zone.

Inner City Zone Developments:

• Golden City Retail by Golden Land Real Estate Development Co. 
• Nature Link Co., Ltd.
• Min Ye Kyaw Swar Tower by Crown Advanced Construction Co., Ltd.

Outer City Zone Developments:

• Super One by Super One Co., Ltd.
• Ocean Super Centre by City Mart Holdings Co. Ltd.

The supporting retail projects collectively represent more than 10,500 sq.m. (113,021 sq.ft.) of leasable space whereas shopping centres brought in only 38% of the overall added stock.  Colliers also expects substantial new completions in 2018, totalling close to 71,000 sq.m. (764,237 sq.ft.) of leasable area - a new record high. Looking ahead, additional stock in the next two years is meagre. 

While 2019-2020 supply appears limited, Mr Paul Ryan Cuevas, Analyst for Colliers International Myanmar, Research and Advisory Department, sees this as a green light for developers to pursue new and better projects like large-scale shopping centres and lifestyle-oriented centres that offer both entertainment and recreational activities to capitalise both on the city's increasing youth population and on improving spending confidence, especially from the lower-middle to middle-income buyers. Mr Cuevas outlined three key factors that developers are encouraged to consider when positioning their retail projects:

1. Differentiation of consumer offerings with a focus on experience;
2. Increasing efficiency of the current mall base through tenant mix diversification;
3. Exploration of new formats and commercial real estate opportunities.  

"Going forward, developers must no longer envision themselves as just professionals who convert ideas from blueprints to real property, but instead as customer-facing providers of a modern retail experience," he added. 

Given the volume of stock delivered in Q1 2018, Colliers witnessed a marginal decline in the city-wide occupancy rate, however, remained above 90%. Mr Karlo Pobre, Research and Advisory Associate Director for Colliers International Myanmar suggests, "the anticipated hike in supply in 2018 is projected to exert a downward pressure on occupancy for the forthcoming quarters. However, strong pre-commitment rates should retain the number at an all-time high." Adding that Colliers had, "also observed that retailers have become more confident, apparent from the increasing number of store expansions and foreign franchise acquisitions. We expect occupancy moving further upwards, and this should, in fact, be facilitated by the lack of new supply starting 2019." 

Meanwhile, the average rental rate remained at the USD 32 per sq.m. per month level. "We anticipate further introduction of higher quality projects to support premium rents in the near to medium term, to be capped in moderation in the next two to three years as competition among landlords may start to increase," Mr Cuevas concluded. 

Click here for a overview of Myanmar's Serviced apartment, retail and industrial sectors. 

For more information on Myanmar's retail property sector email Karlo Pobre from Colliers International Myanmar via the contact details below.

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