More serviced apartment operators in Yangon may soon be offering flexible leases to attract new tenants due to the increasing disparity between supply and demand in the city, Colliers International says.

The research consultancy's Serviced Apartment Market Report for Q4 2019 revealed the city closed 2019 with 20 serviced apartment projects (or a total of approximately 2,340 rooms), with aggregate supply expected to "double by 2021". 

But Colliers Senior Research Analyst for Myanmar, Paul Ryan Cuevas, said demand has remained limited, forcing landlords to be creative when trying to draw in new tenants.

"As it is becoming to be a tenants’ market, landlords or operators have become more open for negotiation and willing to reduce rents over the past three quarters," he said.

"Given the current landscape where there is a mixture of factors, such as a slower arrival of working expatriates, reduced rental budgets and increasing supply, one strategy that operators can do is to start offering more flexible leasing contracts and payment arrangements to entice tenants, allowing for short-term stay."

Colliers Senior Research Analyst for Myanmar, Paul Ryan Cuevas. Source: Colliers

In 2020, Yangon is expected to welcome five new serviced residences, with scales ranging from mid to upscale offerings.

Previously announced to complete in Q4 2019, around 300 units of Premium (Somerset & 68 Residences by United GP Co.), Grade A (The Gonyi Towers by Sae Paing Development Company), and Grade B serviced apartments (The Mona Lisa Residence by A1 Construction Co. and Wyne International Co.) are now moved to 2020, on top of other projects arranged to complete within the year (e.g. The Loi by Loi Seng Kham Co., Golden City Serviced Apartments by Golden Land Real Estate Development Co., & Nature Link Co.)

Mr Cuevas said the upcoming projects mean the vacancy rate was likely to rise across the next few years, placing downward pressure on rents.

"In this competitive rental market where serviced apartments have to compete with individually owned strata title apartment units that are offered for rent, some landlords have to adjust their rental rate
lower," he said.

"This particularly affects the majority of local operators, on top of the pressure brought about by new serviced apartments offering more competitive rates."

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