COLLIERS QUARTERLY CONDOMINIUM | YANGON | RESEARCH | Q2 2019 | 2 SEPTEMBER 2019

Paul Ryan Cuevas

DEVELOPERS VERSUS OVERSUPPLY SITUATION
Senior Analyst | Research & Advisory
Myanmar
+95 0 9 960 381 584
paulryan.cuevas@colliers.com

Summary &
Recommendations Q2 2019 Full Year 2019
2019–21
Annual Average
Over the past years, Colliers has > Developers are advised to present more
witnessed developers saturate the products under the lower tier categories
supply stock with upscale offerings. in order to match the needs of the
This, in turn, has led the high-tier widely underserved low and middle
DEMAND income earners.
spectrum of the market reach an
oversupply state. While we recognise
> The number of completed units grew to
the presence of capable buyers, the
more than 9,760 units as of end-H1 2019.
demand for such offerings remains Due to the recurring delays, a record
niche. This has resonated in the surge of completions is likely to transpire 485 units 12,040 units 3,200 units
relatively sluggish sales velocity SUPPLY in 2020.
observed in majority of projects
under these segments.
Annual Average
Q2 2019 Full Year 2019
Growth 2019–21
In lieu of the current market
characteristics, developers are > An uptick in the cumulative citywide
1pp* 3pp 1pp
advised to shift their focus on take-up rate was observed as at the end
delivering more affordable and mid of Q2 2019. Further launches under the
units. These segments are likely to upscale tiers will only drive the overall
TAKE-UP sales take-up lower in the coming years. 53.8% 55% 54%
appeal to the majority, especially to
the low and middle income buyers,
> Unit prices per sq m across segments
as the difference in terms of pricing
have corrected downwards in the last
with high-end properties remains couple of years. Colliers sees this to
either double or triple the current continue as buyers veer away from high-
prices of mid-tier offerings. This PRICE end and luxury developments.
should be reinforced by bank
partnership allowing more flexible Source: Colliers International
Note: Colliers have revised the calculation of the cumulative take-up rate for Q1 2019 due to a number of projects that were added in the analysis.
mortgage terms.
COLLIERS QUARTERLY CONDOMINIUM | YANGON | RESEARCH | Q2 2019 | 2 SEPTEMBER 2019

HIGH-TIER SPECTRUM HAS Figure 1: Yangon condominium stock (completed units)

REACHED AN OVERSUPPLY STATE 20,000

Star City’s Galaxy Tower (Zone C) has finished its construction as at the end 18,000
of Q2 2019. The completion of the USD250 million-development has raised
Yangon’s condominium supply stock to nearly 9,800 units, up by 5% qoq. 16,000
Colliers initially predicted the overall completion count to increase by 28%
qoq (or a total addition of approximately 11,900 units) at the end of H1 14,000
2019. However, owing to reported cases of deferrals in interior and exterior

Units
finishes, and slippages in civil works (e.g. acquisition of building completion 12,000
certificates), official completion and turnover of some projects such as The
Atrium by Yadanar Mying Construction Co., Ltd., Maha Nawarat 10,000
Condominium (Tower 1) by Maha Shwe Ou Daung Min & Maha Nawarat
Myay Construction Co., Ltd., Sky Suites by SCW Development, and Kanbae 8,000
Tower (Tower A) by Golden Thitsar Co., Ltd. were further delayed until end
of October this year. 6,000

Given the volume of uncompleted condominiums in H1 2019, Yangon is 4,000

likely to witness a record number of completions in the succeeding year (see
Figure 1). For buildings such as Shwe Zawana Condominium by Nation Light 2,000
Co., Ltd., Rose Hill Residence by Soilbuild Group Holdings Ltd., Diamond Inya
Palace by Mandalay Golden Wings Co., Ltd., The Central (formerly known as -
Dagon City Tower 1 - Phase 1) by Marga Landmark, 68 Residence by United

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019F
2020F
2021F
GP, The Infinity (Tower A and B) by KHG Development Co., Ltd., and
Mindama Condominium (Tower D) by Htoo Construction Development
Additional supply durring the year Supply at the start of the year
Group, construction works are still ongoing and will likely conclude in 2020.
Meanwhile, for few select developments, planning and construction has Source: Colliers International
seen stationary movement. Overall, the annual addition by the end of 2020 These predictions resulted from the sector’s observed lackluster
is seen to reach around 4,380 units. Majority of these projects are performance over the past years. One of the factors that is worsening this
considered upper-mid and high-end properties. Likewise, most of these situation is the long-standing oversupply incidence in the high-tier spectrum.
condominiums will be housed in the Inner City Zone. This condition has adversely impacted both buyer and developer confidence.

Meanwhile, launches have noticeably slowed down over the past quarters.
Yoma Land’s City Loft remains the latest condominium that debuted in the
market. Similar to the estimated scenario in Q1 2019, future sales launches
will still likely temper down in the next six to twelve months. Likewise,
majority of the projects in the pipeline will likely to be delayed
The overall investor appetite towards unit purchases has evidently slowed
down. In fact, the citywide take-up rate has barely recovered since the
notable increase observed in 2017, owing to the artificially high take-up rate
recorded in The Central. As of this quarter, the slight increment on the
cumulative take-up rate was partly reinforced by the limited number

2
COLLIERS QUARTERLY CONDOMINIUM | YANGON | RESEARCH | Q2 2019 | 2 SEPTEMBER 2019

of projects launched in H1 2019, which in turn helped developers to focus on selling the remaining stocks. Moreover, developers were keen to offer
considerable amount of discounts if potential buyers ended into real transactions. Given that majority of developers are struggling with selling their units,
they have been rigorous with implementing such strategy. Though, we have seen a small number of projects markedly rising to the occasion and successfully
exhibiting a positive sales velocity. These well-performing condominiums are generally located in the Outer City. Although this location is not yet viewed as a
prime site like Downtown and Inner City, the Outer City performed relatively better than the rest given that majority of the projects in the area remains more
affordable and are large-scale integrated residential developments. Likewise, it can be observed that these projects are mostly under the upper-mid segment
(currently priced at an average of USD1,670 per sq m). Compared to other property classes, the upper-mid has recorded the fastest sales velocity. Basing
solely on the Q2 2019 performance, it was revealed that it will take approximately 1.2 years for all the pre-selling units under such segment to reach sold-out
status. Taking that into consideration, it can be surmised that the buyers remain price sensitive, where majority would prefer buying relatively lower-priced
units albeit being in an inferior location.

In relation, a facet that strongly proves the prevalence of an oversupply is the apparent saturation of high-tier properties in the market. The latest data
indicates that the share of luxury and high-end projects continue to be robust, representing more than half of the aggregate pre-selling units in the city.
Likewise, launches under such segments continued to grow, manifesting a 3% yoy increase. In 2020, Yangon will witness the completion of around 2,050
upscale units – the highest combined annual addition ever recorded for such segments. The high-end segment (currently priced at USD2,920 per sq m) was
able to preserve its 60% take-up status as of Q2 2019 only because of the healthy sales observed in projects (e.g. Golden City, The Lake Suites, and Thanlyin
Star City) built by established developers in Yangon. Meanwhile, the luxury segment continued to struggle. Apart from its consistently low cumulative take-up
rate, the tier’s recorded shelf life is almost four times slower than the upper-mid’s sales velocity. Overall, majority of the developments in both segments are
actually witnessing relatively sluggish sales activities.

Developers must keep in mind that price adjustment and project differentiation will continue to play a central part I ensuring that demand is well-sustained.
Our investigation shows that further launches of upscale properties in the future will only weaken the overall sales performance of the market. Hence,
developers are encouraged to focus more on catering to the needs of the domestic market by introducing more products under the low and mid categories (
or units priced within the USD30,000 to USD100,000 range). Although there are only two projects under the mid category, the segment (which is currently
priced at USD1,135 per sq m) was able to reach a take-up level (52%) higher than the luxury tier. Moreover, it will only take an average of two years for all
pre-selling mid units n the city to be fully sold. This, on the back of the improving sales performance of such tier should entice other investors to enter this
segment. Recently, we are seeing a number of local developers taking heed on this unrealised demand. They have successfully shifted their attention and
have adopted affordable price points. This is supported by the strategies employed by marketing units to entice locals with special discounts and promotions.
Select few developers are also starting reach out to local banks to offer attractive interest rates for long-term loans to lure families, young professionals, and
first-time home buyers.

Table 1: Yangon pre-selling condominiums by segmentation

AVERAGE SELLING PRICE (PER SQ M) TOTAL CONTRACT PRICE
SEGMENTATION DISTRIBUTION
Q2 2019 Q1 2019 QOQ Q2 2019 Q1 2019 QOQ
Mid $ 1,135.00 $ 1,205.00 -5.9% $ 94,680.00 $100,570.00 -5.9% 7%
Upper-mid $ 1,670.00 $ 1,730.00 -1.8% $ 246,306.00 $250,910.00 -1.8% 41.8%
High-end $ 2,920.00 $ 2,940.00 -0.7% $ 446,460.00 $442,780.00 0.8% 43%
Luxury $ 3,240.00 $ 3,200.00 1.3% $ 913,810.00 $901,910.00 1.3% 8.2%
Source: Colliers International

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 For further information, please contact:
Karlo Pobre
Managing Director | Myanmar
+95 0 979 573 3378
karlo.pobre@colliers.com

Primary Author: Ariel Vitor

Property Management Head | Real Estate Service | Myanmar
Paul Ryan Cuevas +95 0 979 034 5466
Senior Research Analyst | Research | Myanmar ariel.vitor@colliers.com
+95 0 9 960 381 584
paulryan.cuevas@colliers.com Hninn Ei Kyaw
Senior Leasing Manager | Real Estate Service | Myanmar
Contributor: +95 0 925 418 8192
hninnei.kyaw@colliers.com
Ye Tun Htet Paing
Senior Researcher | Research | Myanmar Joshua Delas Alas
+95 0 9 505 9431 Senior Manager | Advisory | Myanmar
william.linn@colliers.com +95 0 931 491 678
joshua.delasalas@colliers.com

Joan Mae Lee

Assistant Manager | Valuation | Myanmar
+95 0 931 491 678
joanmae.lee@colliers.com

Hpone Myint Thu

Assistant Manager | Research | Myanmar
+95 0 931 491 678
hponemyint.thu@colliers.com

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Copyright © 2019 Colliers International

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any
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