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Colliers Property Report –Yangon Retail Supply Stock Q3 2019

RETAIL ECONOMICS OF THADINGYUT LIGHTING FESTIVAL

Summary & Recommendations

Citywide occupancy levels remain healthy as at the end of Q3 2019 despite a slight decline resulted from the continuing flight to quality for select tenants. Colliers expects that more innovative trends will persist given the shifting preferences for entertainment features. As retailers and operators start to prepare for the upcoming holidays, we recommend adopting a themed mix of visual installations to cater a festive environment for mall goers. Public spaces capable of being animated are key promotional drivers that entice foot traffic especially during major holiday seasons. Organised activities such as festive-themed events along with installations of decorative merchandising visuals will reinforce retail shop exposure and eventually drive sales. Given the upcoming festivities Colliers emphasises the need on creating unique customer shopping experiences centered on fun, frolic, and holiday celebrations

 

BANKING ON THE HOLIDAY FESTIVITIES

In Myanmar, lighting festivals (Thadingyut and Tazaungdaing) are celebrated in October and November annually with at least two to three public holidays. With the recent revision of holidays by government, the number of public holidays in Thadingyut was extended, making it the second longest after the new year festival (Thingyan). Similar to Chinese New Year and Christmas holidays, Thadingyut also marks the period in Myanmar for local families to gather, celebrating traditions such as gifting parents and elderly relatives with presents. This coupled with extended holidays is expected to spur retail activities across the country.

While some may travel elsewhere during the long break, still many stays in Yangon spending recreational family activities especially in shopping malls. To keep the market engaged and enticed especially during this season, we encourage retailers and operators to provide a mix of unique themes and activities which embody the Thadingyut festivities. Along with more upcoming holidays, Colliers recommends that operators continue to adopt global marketing practices by creating artificial spaces along with promotional activities that are publicly animated. This can be in a form of organised events and platforms such as concerts and live events, friendly and creative contests, interactive indoor installations, as well as the possibilities of extending mall hours especially during peak seasons.

Meanwhile, no new retail development was introduced as at the end of Q3 2019.

This can be explained by the delays in construction activity observed in several projects. As a result, Yangon’s total retail stock remained unchanged, leaving shopping malls such as Kantharyar Shopping Mall and The Central Boulevard Phase 1.1 as the most recent major retail developments in Yangon. Nonetheless, the pipeline for Q4 2019 remains strong. In fact, two shopping mall projects (Yadanar Mall by Crown Advanced Construction Co., Ltd. and M Tower Shopping

Mall by Mottama Holdings) and a supporting retail component (The One Shopping Mall by Creation Myanmar Group of Companies) are expected to complete in Q4 2019 – all situated in the Inner City Area. Also reinforced by the debuts last year, Inner City continued to dominate the total existing stock. New retail centres are expected to be more evident in this area going forward on the back of the upsurge in commercial development, supported by the availability of developable land.

FLIGHT-TO-QUALITY TREND TO CONTINUE MOVING FORWARD

Despite the absence of new stock in Q3 2019, the citywide occupancy rate trailed a modest downward course, both on quarterly and annual bases.

However, major shopping malls witnessed robust occupancy levels above 90%. This resulted from recent flight to quality as witnessed in some developments. Some tenants are now more keen towards newer and more modern developments such as Junction City, St. John City Mall and Kantharyar Shopping Mall. As some older developments also embark refurbishments, Colliers expect to see a modest downward pressure on the citywide average.

As the rainy season comes to an end, retailers and operators should start to anticipate higher foot traffic in major shopping malls. The extended holidays for lighting festivals in October and November would reinforce that and the demand is expected to remain robust in the remainder of the year.

As of Q3 2019, the average citywide rents stood at USD29 per sq metre per month, a decline of 4.2% QOQ and 9.6% YOY. Moving forward, the introduction of more quality malls means the rents may trail a modest upward trend in the succeeding years. Given further liberalization in the economy coupled with the sustained GDP growth, we also expect the entry of more foreign retailers willing to set a foothold in the city. Looking ahead, we advise developers and retailers to start exploring new strategies to engage with shoppers in a more consumer-centric and efficient strategy by using online and digital platforms to complement physical shopping experiences. With the relatively young demographic in Yangon, we emphasise the need to focus on the relevance and resonance of the tenancy mix to the customers. It can be enhanced by more innovative, localised and personalised approaches which seek to create better emotional connections as well as build product and service aspirations. Besides the festive-themed concepts as well as design installations, we continually recommend an integration of F&B and entertainment elements being key demand drivers for retail facilities going forward.

 

Hpone Myint Thu

Assistant Manager | Research | Myanmar

+95 (0) 9 425 006 777

hponemyint.thu@colliers.com

Source :Collier

 

 

 

 

 

 

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