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Colliers Property Report – Yangon condominium stock Q1 2020

Summary & Recommendations

The outbreak that started in Wuhan, China, has now spread to almost 40 other countries, including Myanmar. Its impact on the country, specifically Yangon’s residential market, is unprecedented in terms of the level of uncertainty it has created amongst stakeholders. As it has been a consistent theme over past years, we see delays on construction and launches to continue to characterise the market. Meanwhile, both the cumulative absorption level and selling prices improved.

However, these developments appear momentary, hence, indicating that the sector has yet to recover, especially now with the global health crisis at the forefront. In the short term, we can expect overall vacancy rates to rise and average selling prices to decline. With business activity curtailed, we may see a slowdown in unit purchases.However, given the government’s recent efforts to contain the virus, we expect to see purchasing activity recover in the medium-term.

COVID-19 STRAINS STAKEHOLDERS

Recent research conducted by Colliers determined that as of end-Q1 2020, Yangon’s condominium supply increased by 5.7% qoq. This upturn is due the completion of projects namely, East Race Course Condominium, San Yeik Nyein Condominium, Royal Garden View by Yadanar Mying Construction Co., Ltd., The Leaf (Tower A, B, C, D), and Kanbae Towers (Tower A). Fortunately, these projects were concluded way before the Myanmar government officially announced the country’s first positive cases. These projects are welcome additions and should bode well to the growing upper-mid property options available in the Inner City Area. Meanwhile, given the recurring delays, coupled with the threat of the pandemic, no new launches were witnessed apart from Yoma Land’s City Loft (Phase 1 – Tower A2).

Going forward, developers are likely to hold back new launches in view of the weaker sentiment.In relation, the slow-moving sales activities, coupled by the rise of uncertainty brought about by the pandemic towards the latter part of the reviewed quarter, has evidently gnarled market confidence. As both buyers and developers have become more vigilant amid the volatile conditions, sales transactions in the city has remained low. Though, investment activity has not entirely ground to a halt. Some unit purchases have progressed, especially in the Outer City Area, despite the difficulties of doing business, and respective sales team of some projects continue to report interest for select properties. Inevitably, however, there have also been numerous deals postponed and units taken off the market.

Colliers anticipates negative impacts on demand in the near-term, but this will be transient (assuming conditions get better in H2 2020). On the bright side of things, we still see potential buyers of residential properties in the near future; and for those who have lived through the experience of working from home during the outbreak, they might consider purchasing a unit which has a dedicated home office/study area over one that does not. With this expected demand, developers may well have to consider adding a separate home office/study area into their design plans in the future. In lieu of the current situation, majority of developers have decided to further reduce sales prices by 20-30%. Similarly, several have begun offering more flexible packages and payment terms to sell their unsold units. In general, until such time the market recovers from the pandemic, we expect this trend to persist and become pronounced more than ever.

Source : Colliers

For more information , please contact :

Paul Ryan Cuevas

Senior Analyst | Research Myanmar

+95 0 9 960 381 584

paulryan.cuevas@colliers.com

 

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