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The Myanmar real estate market


Myanmar's real estate market - and Yangon specifically - has been through several different phases since the lifting of international sanctions on the country in 2012.

A period of rapid price growth, foreign investment and new project launches in 2013-15 was then followed by a downturn brought on by various factors, including greater regulatory uncertainty after the landmark change of government in 2016.

Over the course of 2019 there have solid signs of recovery in the market, as developers and contractors adjust to new conditions, and without doubt there remains significant potential for future growth.

As of late 2019, the government is clearly making a renewed push to improve economic conditions, with parliamentary elections now only one year away. Various measures taken this year include a long-awaited move to allow foreign insurers into the market, the increase of the electricity tariff, and the release of the Myanmar Sustainable Development Plan – including its Project Bank - intended to address concerns about overall vision.

Despite the recent economic push, questions remain about how much change can reasonably be accomplished. 

Although Myanmar faces serious and varied challenges, its GDP growth rates are still among the highest in Southeast Asia, and the still-underserved market presents vast opportunities. If these challenges can be addressed, the country’s prospects are bright, including in the real estate and construction sectors.

Overall, the Yangon real estate market appears to now be emerging from a challenging period, with progress on legislation and financing options likely to encourage more sales going forward, particularly in the mid-range market. We still expect to see more project cancellations and delays, however, as developers reassess the viability of projects that were originally planned several years ago and are no longer feasible in current conditions.   
Off-plan residential sales showed signs of greater activity in H1 2019 at some developments, and several new projects were launched. However, there are wide variations in take-up across projects. Some particularly compelling offerings saw significant sales, such as Star City and Times City. Several developers halted sales for their projects in the first half of 2019, while others continue to organise regular sales exhibitions and promotions, with discounted pricing. 

While sales still remain modest, a significant residential pipeline is evident. In the Grade A market, we expect around 5,000 new units to come online by the end of 2019, with more than half scheduled for H2 2019, although further delays are likely.

We still expect more high-end office units to come online in the next few years, with further downward pressure on leasing rates, which appear to be relatively flat at present. 

Retail real estate continues to outperform other areas of commercial real estate, as Yangon's emerging class of consumers spur the development of new high-grade retail space across the city. 

The Condominium Law finally came into force in H2 2018, after years of uncertainty and delay. Its impact is already being felt, with developers having started to register projects with local Condominium Management Committees. The new law may also open up a bigger spectrum of financing options for homebuyers. However other pieces of legislation, such as the Apartment Law and Real Estate Service Law, are still in a draft stage.

The hospitality sector is experiencing a challenging period, however it has been catching up as of H1 2019, showing improvements in tourist arrivals. Coupled with a number of high-end openings in H2 2018, this has created downward pressure on occupancy and sales.

Nonetheless, interest in the hospitality market remains from overseas investors, with several new projects expected to bring a significant number of rooms onto the market in H2 2019 and 2020, though hospitality developers may still look to rethink their offerings as the market works to digest the excess stock. 

One indicator of the health of the market will be the interest shown by developers in the proposed Yangon New City. The ambitious project picked up steam in H1 2019, culminating in the release of the mega-development's master plan in July 2019.

The project - if it moves forward - is likely to reshape western Yangon and galvanise further investment in the commercial capital's infrastructure.