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Colliers Property Report – Yangon Retail Q2 2020

LOOKING BEYOND THE AFTERMATH OF THE CRISIS

Summary & Recommendations

Although a slow but steady recovery of footfall has been seen in major shopping malls of Yangon, the retail activities have yet to reach to the pre-pandemic levels as at the end of Q2 2020. In fact, the impact of this pandemic is far from over and it may be months before this ongoing socioeconomic disruption fully abates. The speed of recovery is expected to be highly dependent on the successful and effective containment of the potential outbreak waves in the next three to six months. Despite the economic relief and stimulus plans rolled out by the government, further decline in consumer expenditure may be inevitable and that, in turn, may pose challenges especially for fashion and lifestyle tenants in the short to medium term. The changing consumer sentiment and the shifting demand focus towards essential items are likely to buoy retail demand, however will remain insufficient in the near term.

ONGOING MOVIE THEATER CLOSURES MAY STIFLE FOOTFALL

Yangon’s total retail stock exceeded 390,000 sq metres with the completion of the City Mart Supermarket near Thilawa Special Economic Zone in Thanlyin Township. In Q2 2020, the citywide average occupancy rate declined by 1.3% QOQ to settle at the 88% level. Should constructions remain on track, major projects anticipated to complete in 2020 will include M Tower Shopping Mall and M Terminal by Mottama Holdings, Inno Shopping Mall by Inno Group, The One Shopping Mall by Creation (Myanmar) Groups of Company Limited and The Central Boulevard Phase 1.2 by Marga Landmark. The combined space of these projects represents a total leasable area of more than 36,000 sq metres.

According to Google Mobility Report, the retail and recreation trends hit a new low with 74% plummet, at its undermost, in mobility on April 15, coupled with the 10-day long leap year Thingyan holidays. Meanwhile, on the same day, the grocery and pharmacy trend also saw its lowest tumble at 65%. As the city remerged from Thingyan dormancy, majority of the shopping malls witnessed a slow but gradual recovery and resumption of retail activities in the following weeks. In normal times, recreational facilities such as movie theaters were the main drivers of foot traffic in major shopping malls. The continuing closure of movie theaters, however, shifted the playing field, making shopping malls less distinguishable among customers. A strong demand for F&B during pre- pandemic notwithstanding, the rise of online food delivery platforms combined with fading distinctions between major retail developments, under social distancing measures, may create a more challenging retail environment towards the end of 2020.

As of Q2 2020, the citywide average rental rate stood at USD25.6 per sq metre per month, a decline of 10% and 16% on quarterly and annual bases. Apart from some newer developments, majority of the adjustments in rental rates occurred mostly in older shopping malls, supermarkets and department stores. The rate adjustments in newer developments can also be attributed to the overall mobility downtrend during and after the Thingyan holidays, as a result of social distancing measures.

Meanwhile, the recent opening of Makro Myanmar Wholesale Store in Mingalar Taungnyunt Township underlined the divergence between essential and non- essential retail activities in Yangon. Despite uncertainties surrounding the pandemic, the flagship store witnessed a significant interest from customers, thereby also reaffirming the blurring aspects of shopping malls and hypermarkets of the city in times like today. The shift in customer behavior with demand spikes for essential products such as long lasting staple food, cosmetics, personal care and household items may require retail operators to come up with strategic tenancy mix in the following months. In Colliers view, reinvigorating this with the adoption of customer friendly and multi-faceted online channels will ensure resilience moving forward.

 

Source: Colliers Yangon

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