Retail space rents are increasing as much as 50 percent year-on-year, squeezing not only small and medium enterprises, but also big business, out of profitable areas in Yangon, local businesses and experts said last week.
A fruit vender sorts through stock at his Yangon shop. Local shopkeepers admit they are in danger of losing their businesses due to increasing rents. Photo: AFPA fruit vender sorts through stock at his Yangon shop. Local shopkeepers admit they are in danger of losing their businesses due to increasing rents. Photo: AFP
“The rental market in Yangon increases year to year, including for the retail market that faces huge difficulties with rent,” said Daw May Zin Soe Htet, marketing manager at City Mart Holdings Co Ltd and City Express convenience stores, adding that the popular supermarket chain had also felt the pinch of rising rents.
“If the rentals continue growing like this there will be a lot of difficulties for businesses to survive in this market. It will be a deterrent for new retailers.”
The Myanmar Times previously reported that rising rents are threatening traditional retail hubs. In February, retail shop owners at Yangon’s Yuzana Plaza said that they have filed a letter with parliament complaining that they would likely lose their business if the plaza enforces a substantial increase in rent slated for March.
Currently, average downtown rent for a 15 by 12 by 50-foot retail space is between K1 million and K1.5 million per month (US$1000 to $1500), property insiders said.
In the popular townships of Botahtaung, Kyauktada, Latha, Pabaedan and Lanmadaw these rents rise as high as K10 million per month for 1250 square foot ground-floor premises.
“The rent for a … convenience store has gone up K500,000 to K1.5 million in just four years,” said ABC convenience store chain managing director Daw Wai Thit Lwin.
On top of rental expenses, a tenant will have to pay the outfitting costs of rented space, a cost that is not recouped from the landlord – even for permanent fixtures – upon vacating of the premises.
Daw Wai Thit Lwin said that of the total start-up cost for opening a store, monthly rent accounted for 40pc of the total expenditure.
Increasingly foreign companies or joint ventures are entering the high-end retail space, pushing old tenants out, U Khin Mg Aye from Shwe Kan Myae real estate said.
As local businesses are squeezed out of popular downtown locations, retail hubs are forming in Kyauk Myaung, Tarmwe, Sanchaung, Hlaing and Kamaryut where demand has pushed rents up 50pc year-on-year to a K1 million average monthly fee.
In South Okkalapa and Thingangyun townships retail rental prices had jumped to K5 million per month on the back of businesses moving out of downtown and flocking to nearby townships.
“New retailers are worried about investing in the market because of the high rents that mean they cannot spend money on modern shop fittings like air con or CCTV,” Ko Min Min Soe senior agent at Mya Pann Thakin Real Estate Agency said.
Retail tenants also have to pay lump sum rent upfront upon signing a lease, making it difficult for start-ups to enter the market, Ko Min Min Soe said.
Traditional retail space inside markets is also rising as demand from businesses being pushed out of downtown increases.
Daw Yandanar, a shop owner in Mingalar Mon Market in the Mingalar Taung Nyunt retail hub, said her rent had risen 200pc in two years.
“My shop sells kitchen electrical goods and is on the ground floor of the New Mingalar Mon market. When I re-signed my rental contract the rent is now K200,000 per month. It was K100,000 last year and K10,000 before that,” she said. “Even though the rent is high, we have to pay to stay here.”
Last year a group of retailers formed the Myanmar Retailers Association in an effort to provide a vehicle for retailers to protect their rights.
“We are trying to draft the retailer rights for retails,” Daw Win Win Tint, chairperson of the new association told The Myanmar Times.
Retailer rights are wrapped into the consumer protection law, but are very limited in scope and power, she said. The association has begun work to draft a campaign document geared toward enshrining a more sophisticated set of rights in legislation, she added.
As well as being lumped with all shop-fitting expenses and being vulnerable to drastic rent hikes upon contract renewal, tenants are also defenceless against eviction.
The group is scheduling a member meet this month to discuss eviction threats retailers face as they see their traditional shops slated for demolition, remodelled to office space or re-priced with spiraling rents.
Source: Myanmar Times