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Colliers Property Report –Yangon Retail Supply Stock Q4 2019

Summary & Recommendations

With the opening of Times City and The Secretariat, Yangon continues to witness retail sector modernisation pivoted on the hybrid of shopping malls and privately occupied public spaces. Meanwhile, the citywide occupancy levels remain healthy as at the end of Q4 2019. Given the shifting preference for entertainment, Colliers expects more innovative trends to persist moving forward. The prospect and opportunities for large-scale lifestyle- oriented shopping malls with full- fledged recreational elements remain vibrant.

Colliers expect modern shopping malls adopting animated public space features and simulating city environment to perform better than older retail space formats. More than just a commercial establishment, we encourage developers to design and anchor future shopping malls as multi- purpose city centres conducive to artistic, cultural and social gatherings.

MODEST STOCK INCREASE EXPECTED IN 2020

As of Q4 2019, Yangon’s total retail stock grew by 5% QOQ and 6% YOY. This rise in supply is mainly prompted by the completion of Times City Shopping Mall by Crown Advanced Construction Co., Ltd. in Kamayut Township. Built on a 10-acre land in Inner City Area, Times City is a mixed-use development project that is slated to accommodate an upscale hotel, two office towers, two retail malls and a high-end residential building. The vicinity combined with the existing Junction Square in close proximity is anticipated to be seen as a promising up-and-coming business district in west Yangon. At present, the retail area of Times City is separated into two namely Times Mall and Jewellery Mall, the latter being the first modern major jewellery retail area since the inception of the heritage Bogyoke Market in downtown. Also launched in Q4 2019 was The Secretariat by Anawmar Art Group in Kyauktada Township which is formerly the cabinet office during the colonial era. Looking closely, the extensive public promenade catered by both Times City and The Secretariat will serve as the new town marketplace or public domain luring more foot traffic.

Meanwhile, we expect the total supply to witness a modest uptick in 2020 – totaling to almost 35,000 sq metres (380,000 sq feet) of additional leasable area following the recent delays. Notable developments such as M Terminal and M Tower Shopping Mall by Mottama Holdings, The Central Boulevard – Phase 1.2 by Marga Landmark, The One Shopping Mall by Creation (Myanmar) Groups of Company Limited and Inno City by Inno Company Limited are all expected to contribute to the aggregate supply for 2020. In terms of retail classification, a large majority of the pipeline projects in the next three year will fall under the shopping mall category.

Projects such as The Garden by Kajima Corporation and Yoma Central by Yoma Land are some of the sizeable shopping malls set to debut in 2021. However, additional stock in the said year is relatively meagre. On further macroeconomic reforms and market liberalisation, we forecast the competition after the election to intensify as many would rush to take advantage of this opportunity. As such, we advise developers and investors to introduce more spacious and compelling offerings with leisure and entertainment elements. Gearing towards low and middle income populace, and adopting international standard quality and practice will help leverage over competition and drive value enhancement in the long run.

PUBLIC SPACES WITH THEMATIC AMBIENCE FOSTER RETAIL ACTIVITIES

Although public spaces in general refer to city streets and parks, shopping malls curated with functional and experiential aesthetics also serve as public space for its locality. A mall meticulously designed by considering physical, social and environmental factors can develop the sense of public place enabling it to not only provide more experience for visitors but also function as a recreational platform. By creating a thematic ambience that can evoke identities and memories, developers and operators can strengthen the relationship between visitors and their shopping precinct through unique experiential process.

The recently restored Secretariat is one such place where the said relationship between people and their environment is evident. As many attach value to its symbolic, heroic and heritage account, The Secretariat creates an ideal historical bond as a landmark spanning beyond eras and enticing more footfall and visits for many generations. To foster its appeal, Colliers recommends deploying more nature elements throughout the compound and placing benches along the promenade to create an illusion of the urban environment for visitors. By ensuring direct engagement with customers and diverse tenancy mix, its interior already organised as the urban matrix with public squares and open streets are ideal venue for various exhibitions, events, promotions, performances and concerts from time to time.

Meanwhile, the citywide occupancy rate buoyed at 89% level at the end of Q4 2019 with almost of no changes both on quarterly and annual bases despite the sizeable increase in new supply. With the healthy pipeline for 2020, we expect this trend to persist towards the end of the year. Furthermore, the impending entry and competitive expansion of foreign F&B brands should push the overall demand and take-up rate upwards.

For the past twelve months, however, average rental rates have gradually corrected and tilted further downwards. As of Q4 2019, the average citywide rent stood at USD28.7 per sq metre per month, a decline of 1% QOQ and almost 9% YOY. Although higher quality projects might support premium rents in 2020, the looming competition among landlords and new launches may start to gain momentum moderating the citywide rental imminently.

To maximise the potential in a more bankable manner, we encourage to engage shoppers by accommodating space for event-based as well as experience-driven entertainment activities. Initiating new and innovative concepts by facilitating a dynamic and interactive relationship with brands in existing public domains should bode well for the sizable young demographic in Yangon.

Source : Colliers

For more information , please contact :

Hpone Myint Thu

Assistant Manager | Research | Myanmar

+95 (0) 9 425 006 777

hponemyint.thu@colliers.com

 

 

 

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