State of Service Office Business in Yangon 2014

by Kevin Heng


Myanmar, formerly known as Burma: the final frontier of foreign investment. A hitherto untapped market of 60 million in between the 2 most populated countries in the world. Such clichéd terms are often thrown around in any article one comes across when one is researching on how to invest in Myanmar. What is less effectively communicated is that Myanmar is an emerging market of the extreme variety. Nothing can be taken for granted here; not the electricity, not the contract with your local business partner, not even the roof over your head. That’s right, contrary to common expectations, despite the low cost of living in general, property prices in Yangon are on par with Singapore, Hong Kong and Manhattan. The purpose of this report is to advise you on the best way to set up shop in the brave new world that is Myanmar.

Overview of Yangon’s commercial real estate

Table 1a the most recent statistics for Grade A commercial space in Myanmar in Q1 2014.

Total available in Myanmar 400,000-600,000 sq-ft
Sakura Tower 131,804 sq-ft
Centrepoint 166,840 sq-ft

2 buildings Sakura Tower and Centrepoint contribute up to 75% of what is termed Grade A commercial space in Yangon!


Table 1b shows prominent additions to Yangon’s future supply:

Additions to Yangon in next 4 years 1,800,000 sq-ft
Sule Square 780,000 sq-ft
Junction Square (ready in 2-3 years) 200,000 sq-ft
Yangon Business Centre (ready in 2 years) 280,000 sq-ft


Due to the low amount of total available supply, it is clear why prices are so high. Table 2 illustrates costs in Yangon as compared to Singapore.

Location US$/month/sq-ft
Singapore Grade A
MICT Park 4
UBC# ~6-7
Sakura Tower# ~10
SICC# ~5-6
Typical Villa at Pyay Rd* (9000 sq ft) 2.7
Yangon Serviced Office Average 15.67

* Pyay Road is a tree-lined arterial road from Yangon International Airport to Downtown. Many embassies and villas of the wealthy can be found there.

# Take note that there is currently no Grade A offices in Yangon based on the type of Grade A office we are familiar with in NY, London or Singapore. Sakura Tower is probably a Grade B office by international standard.


New projects are in the pipeline but construction will be delayed for a variety of reasons:

  • Disputes over the ownership of the land due to unclear title
  • Lack of skilled personnel
  • Lack of imported materials
  • Zoning laws which are still evolving
  • Slower work during the monsoon season

Projects facing difficulties

Project Developer Difficulties encountered Details
Suhtoopan Towers Unknown Dispute between developer and landowner Landowner has stated their intent to continue with the project under another developer, but no news has been forthcoming.
Landmark Project FMI Bureaucratic quagmire $400 million mixed development planned, including luxury hotel. FMI trying to acquire and convert century-old Burma Railways building into the centrepiece of the development. Inability to secure a lease extension from the Ministry of Railways makes it difficult to see how their project will materialise.
Centre point Towers Sofitel; now Thailand-based LP Holding Cash Flow Work began back in 1995 but was mothballed in 1998 after the Asian Financial Crisis. In 2005 work restarted at the government’s urging, with another injection of $15.25 million in September 2009. Finally on March 6 2013, Hilton said it had reached an agreement with Thailand-based LP Holding to manage Hilton Yangon in Centrepoint Tower, which had by then cost US$100 million of foreign investment.


What type of customer are you?

Given the operational difficulties of setting up an office in Yangon, many firms will find the “plug and play” aspect of serviced offices attractive. However, are they the best choice for SME’s? With an average price of US$1,500 per month for a 2-man office, any company will find it in their interests to find a permanent residence as soon as possible. For companies sending 5 or more people into Yangon, refurbishing an apartment immediately might be more financially prudent.

Table 3 organises different types of companies based on:

  • how image image-conscious they are
  • whether their clients meet them in their office
Customers visit office Customers do not visit office
Image conscious Box A

  • International Law firms
  • International Auditing firms
  • International Banks
  • Insurance companies
  • Rep offices of MNC’s or listed companies (HQ paying rental)
  • International Airline offices
  • Foreign Trade Office of major countries
Box B

  • Oil and gas majors
  • Telecoms operators
  • Advertising & Design companies
  • International News Agency
Image not a priority Box C

  • Travel agents
  • IT companies
  • Trading companies
  • Distribution companies
  • Printing companies
  • Shipping and freight forwarding companies




Box D

  • Sub-contractors or suppliers to :
    • Oil and gas majors
    • Telecoms operators
    • Mining companies
    • Construction companies
  • Construction firms
  • Head Office of retail chain




Box A (image conscious – customer visit office quadrant) shows companies who are the most likely clients of serviced offices. They require an office that projects an image of professionalism and prestige to their customers as their clients visit their office.

Companies in Box B (image conscious – customer do not visit office quadrant) may not have as many visitors, although they still require an office that befits their image. It need not be a traditional tower block or in the central business district.

Box C (image not priority – customer do visit office quadrant) consists of the service companies such as trading and distribution companies that import their own products or represent a multitude of brands from overseas.

Industries in Box D (image not priority – customer do not visit office quadrant) would find it easiest to acquire office space because they have the least demanding criteria.

Serviced office comparison

Table 4

Hintha Business Lounge Keier Group OfficeHub
Price Range for 2 person Executive Suite ~US$2500/month ~US$950 /month ~US$1100/month
Size of 2 person Executive Suite ~120 sq-ft ~120 sq-ft ~60 sq-ft
Price range for Registered office ~US$400 per annum Not stated ~US$300 per annum
Price range for Hot Desk ~US$450/month ~US$450/month ~US$550/month
Price range for Virtual Office ~US$100/month ~US$100/month ~US$100/month
Meeting Rooms 4-Person Room US$20/hour; US$110/day
12-person Room US$30/hour; US$150/day
Not stated. 2 person suite enjoys 50% off standard rates 5 person interview room: US$25/hr 12 person boardroom US$35/hr
Administrative Assistance (secretarial support) US$5/10 minutes; US$25/hour Basic secretarial support Meeting and greeting guests
Telephone answering
Message handling and forwarding
Mail and fax management
Internet Private VLAN for each office, WIFI for hot desks and business lounge 4 Mbps fiber optic upgrade able every 4 months. LAN cable, no wireless. Private wireless for each client, no LAN cable. 256kbps initially, can be upgraded to up to 1mbps at extra cost
Occupancy Rate Not stated 50% 25%
Catering Services Yes Yes. Delivery from nearby area. In-Office Drink and Snack Menu
Catering for brewed coffee, tea and other beverages
Catering for snacks / meals
Average lease of clients Not stated 1 year 1 year
Minimum lease 3 months 3 months 3 months
Telephone line Individual number for each suite Individual number for each suite and each hot desk Individual number for each suite and extension lines for each hot desk
Printer and photocopier B&W from 25c/page
Colour from $1/page
50 free B&W copies a month.
Pantry (fridge, coffee machine, microwave) Offered to all clients (regardless of package) Offered to all clients (regardless of package) Offered to all clients (regardless of package)
Security 24HR Security Key card operated lift. Extra charge for working after office hours because staff needs to lock up. 24HR Security
Business registration/incorporation of company Yes. Will aid in finding local business partner Setting up / incorporation of companies
Post-incorporation matters
Incorporation of companies
Legal services Not stated Legal services offered Legal & tax advisory services
Book keeping Payroll Processing on request (includes tax & social security) Not stated Book-keeping, accounts, annual audits, etc
Travel Travel agency recommendations
Car hire
Local restaurant suggestions
Hotel / housing arrangements Transport
Visa application
Air ticketing
Taxi, car, airline and hotel booking
Relocation and Housing services
Visa Applications
Courier/messenger service Messenger Service
Downtown $5/hour + Transport
Other $20/hour + Transport
Not stated Local and overseas courier assistance
Misc. services SIM card rental Translation
Design services
None stated

Services which are not stated may still be available on demand.

Analysis of the serviced office sector

Low occupancy

In our research we have found that despite the limited supply of prime office space, serviced offices in Yangon were not running at full occupancy. For OfficeHub, this could be because of they have been in the market for only 8 months. We were informed that Keier received 200 inquiries in the past year and half but is only running at 50% occupancy. This, we were told, was because new companies wishing to do business in Myanmar had severely underestimated the conditions here and its impact on their cash flow and operations, forcing them to leave for other SE Asian markets like Vietnam and Cambodia. Apparently the high cost of serviced offices was not a major factor.

Lack of information

It is difficult for customers to gather information here, about anything let alone what serviced offices there are in the market. The serviced offices themselves have stated that they choose not to advertise. While there are certainly some advertisements in expat oriented publications like Myanmore, perhaps the serviced office providers have calculated that the circulation of these publications or websites does not justify the cost of advertising.

Scope of future supply

Serviced offices are not expanding – for example, Keier Group has put its plans for expansion (Keier 1, 2 and 3) on hold.

One of the reasons could be the difficulty for service office operators to predict future demand. One of the reasons for the relatively low occupancy rate of serviced offices is because they were formally occupied by firms which came in during the telecoms bidding process. The same happened with the oil and gas tenders. As it is impossible to predict when the government will take similar actions in the future, it is impossible to plan for such spikes in demand.

Another reason could be the impending entry of larger and more powerful Serviced Office brands into Yangon. Rumours that Regus PLC is moving into Yangon are unsettling some of the existing players. Regus will position itself to be a major player in the market, providing the highest quality office space. However Regus prices themselves, the smaller serviced offices will have to price maybe 10% to 20% lower in order to hold on to their customers, and when Regus first enters the market, it is likely that they will price themselves on par with the existing players in order to quickly build a customer base. Although most service offices are currently located in Downtown Yangon, Dagon City has been slated as an area for serviced office development. Should Regus build their office there, this could attract clients who are tired of the growing traffic congestions in the Downtown area.

Other serviced office providers whom we talked to were sceptical about the entry of newcomers into the market, citing the high cost of property and the steep learning curve of doing business in Myanmar. They were confident that existing serviced offices could continue to maintain their current rates for the next 2 years.

Future property prices

Despite their rates, the opinion of veteran developers is that serviced offices are not necessarily profiteering from the current market situation but that their high prices are a necessity for them to recoup the exorbitant costs they are paying to their land lords.

Serviced office providers have no intention of undercutting each other as they believe that the market is large enough so that they do not have to aggressively compete with each other.

It is inaccurate to project the percentage increase in rent from 2012-2013 to 2013-2014 and beyond. 2013 & 2014 were exceptional year because of the telecoms and oil & gas tenders being held. There was a spike in demand due to various companies coming in to participate in the tenders such as Telenor, Ooreedo, and SingTel in telecoms and Shell, Woodside and ENI in oil & gas. After the award of the tender a wave of consultancies and sub-contractors from these 2 industries would enter the Myanmar market like pilot fishes following the whales looking for office space. The telecoms and oil & gas tenders, in addition to other aspects of market liberalisation in the last 3 years, is the reason for the 150%-200% increase in property prices over the same period.

In any case, foreign investors whom we have interviewed have stated that prices are approaching the tenant’s threshold. Any further increase will simply push investment away, with negative results for Myanmar’s economic development.

Alternatives to standard commercial space

Working from hotel

The option pursued by most SME’s and sole proprietors who have recently arrived in Yangon. With the spike in hotel prices (Sedona hotel has increased its room rate from ~US$50 a night in 2012 to ~US$200 a night in 2014); many businessmen feel that it is impossible to pay for both a place to live and a place to work. In the past, major companies were also based in hotels, as these were the only places with a regular supply of power, internet and other amenities. Since the spike in demand for property in Yangon began, hotels are not renewing their leases with such companies and are converting their premises back into ball rooms and meeting rooms. The result of this is that the companies affected are now adding extra pressure on property prices as they are back in the market. Hotels are still renting out space for board meetings but these rooms can cost US$100/hr.

Converting condominiums and villas

The usage of villas and condos for office space is an attractive option; villas have been used by both MNC’s like Unilever as well as the multitude of NGO’s based in Yangon. Myanmar does not have the same zoning laws as other countries whereby commercial activities cannot be undertaken in residential areas.

Furthermore, they double up as accommodation for staff. Much like the solution with hotel rooms, it seems absurd for business owners to pay a premium for both an office space in Downtown Yangon as well as an apartment (which may be of dubious quality) in Inner Yangon. Moreover given the growing traffic congestions in Yangon – it may not be a bad idea to live next to your office.

This is the most popular option for firms that do not have to worry about constant streams of visitors, such as those in Box B (image conscious – customer do not visit office quadrant) & Box D (image not priority – customer do not visit office quadrant).
The key benefit of the villa option is its secondary function of providing accommodation to expatriate staff. If the company in question has less than 10 expatriate employees, then renting and converting a condo/villa to an office-cum-home is ideal. In the case of Telenor or Ooredoo, with a head count of over 2,000 employees each, most of whom are local, it makes more sense to secure their own 8-10 storey building as an office for reasons of prestige and security. Visitors to companies in Box D are mostly suppliers and not end customers; which allows them to be based in a less accessible part of Yangon where property prices are lower.

The downside is the initial capital required. While the price of a villa in Pyay Road is lower than one of the few purpose built office blocks in Yangon, it is still high by international standards. When dealing with local landowners, it is normal and expected to have a 1 year lease which is fully paid up front. Most companies find it difficult to deliver US$300,000 upfront to a landlord with little to no prospect of short term revenue.

The residential design of villas and condominiums does not usually make for a conducive working environment. While these details may affect some industries more than others, it is still worth noting that renovating or retrofitting a villa can cost between US$500,000 to US$1,000,000 and is not tax deductable.


To summarise, demand for serviced offices has come in 2 waves: during the telecoms and oil & gas tenders and after. The nature of demand has been a sharp spike as foreign companies rush in to bid, then leave when they fail, or move into a permanent office when they secure the bid. When these companies first arrive, they need to set up office quickly, hence their preference for serviced offices.

After the tender has been secured by the operator, its suppliers and subcontractors follow. These followers are characterised as being in Box D (image not priority – customer do not visit office quadrant), and will therefore not normally go for serviced offices, instead opting for a 3 to 4 year office lease in Yangon.

There are certain clients who have secured relatively long leases with serviced offices, up to 3 years in fact. However we can assume that serviced offices can only be a short term solution given their costs as shown in Table 2.

The most likely consumers of serviced offices would be industries that are image conscious like in Box A (image conscious – customer visit office quadrant) and Box B (image conscious – customer do not visit office quadrant) in Table 3. Telenor is a good example of the behaviour of industries in Box B (image conscious – customer do not visit office quadrant). During the telecoms tender they rented most of the space at My Yangon Office in order to hit the ground running but they have now moved into their own premises once they have been awarded their telecom licence.

Industries in Box A (image conscious – customer visit office quadrant) do not necessarily have the money to spend on their own Grade A office but because image is important to their company, they are forced to choose serviced offices over converted flats or villas in the short term. Those with high volumes of customers however, may be subtly rejected by serviced offices due to the disruption this will cause to other serviced office occupants as well as the security of the premises.

We can conclude that the primary source of revenue for serviced offices comes from industries that are image conscious like in Box A (image conscious – customer visit office quadrant) & Box B (image conscious – customer do not visit office quadrant). However, this source is transient until companies find their own offices. This explains the high price of serviced offices as well as its low occupancy rate. For companies which do not fall into boxes A or B, we recommend alternative options, specifically converting residential apartments to offices cum home.

We hope that this report has been helpful in making the right decision when finding an office for your operations in Myanmar.

Author: Kevin Heng

(Kevin is studying Politics and International Relations at the University of York in the UK. This article is a result of a project that Kevin was involved in when performing his internship at Consult-Myanmar Co Ltd in Yangon. )

The views expressed above are those of the author and not necessarily represent the views of the government agencies, companies or individuals mentioned in the article. Read our complete disclaimer policy here.
The article was also published in full at Myanmar Business Today Journal.

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