Yangon’s F&B market A real estate...

YOUR PROFESSIONAL PROPERTY ADVISOR IN MYANMAR

Yangon’s F&B market – A real estate perspectiveMarch 2017

• Success story of Myanmar real estate market

• Limited amount of stock

• Growing number of foreign brands interested in entering the market

• High occupancy rates

• Buoyant rental levels


Yangon’s retail market – Overview

Yangon’s retail market – Supply


• Supply currently severely outweighed by

demand

• However retail space is increasing

quickly

• Supply increased by c.14% in 2016 – up

to almost 2.7 million sq ft Gross

Leasable Area (GLA)

• Approximately 1.4 million sq ft of new

space due to complete in 2017

• More than 50% increase year-on-year1.25

1.75

2.25

2.75

3.25

3.75

4.25

2014 2015 2016 2017 (Forecast)

Mill

ion

s of

sq

ft(G

LA)

Retail supply, sq ft (GLA)

Yangon’s retail market – Demand


• Demand increasing

• 2014-2017 has seen entry of many foreign brands via franchises:

Yangon’s retail market – Occupancy rate


• Extremely high occupancy rates of over 90% in all prime, 2nd tier and even tertiary schemes

• Junction City

• Due to complete end of March 2017

• Already reporting c.100% pre-letting levels in its mall

• HAGL Myanmar Plaza

• Phase 1 mall has very high occupancy levels

• Developer set to add further retail to Phase 2 in 2017/18

Yangon’s retail market – rental levels


• Average retail rent = c.$2.9 per sq ft per

month

• Top developments e.g. Myanmar Plaza have

achieved rents as high as $5 per sq ft per

month

• Even higher rents for certain key F&B units

• Junction City quoting $5 - $10 per sq ft but

average rent is $5 per sq ft per month

• Retail on the brink of rising above office

rental levels

2.0

2.2

2.4

2.6

2.8

3.0

3.2

2013 2014 2015 2016 2017(Forecast)

USD

per

sq

ft

Average rental rate per sq ft

Yangon’s retail market – Key locations


Downtown

Midtown

Uptown

Outer City

Source: Google Maps, SPS

Yangon’s retail market – Key downtown malls


Photo Name Size (GLA) Description Developer

Junction Maw Tin 85,000 sq ft

Retail podium, including

gym and cinema, under 2

residential towers. Opened

in 2010

Mostly local tenants.

Shwe Taung

Group

Sule Square 64,583 sq ft

Attached to the famous Sule

Shangri-la Hotel (formerly

“Traders Hotel”).

Mostly office space, with a

few floors of luxury retail.

Shangri-La

Hotels

Yangon’s retail market – Key midtown malls


Photo Name Size (GLA) Description Developer

Myanmar

Plaza347,168 sq ft

22-storey Grade-A office

tower, 5-storey retail

podium including shops,

fashion, F&B outlets,

anchor supermarket.

HAGL Myanmar

Junction

Square183,000 sq ft

Opened in March 2012,

including 270 shops, a

Citymart supermarket

and 3 cinema screen.

Currently being

expanded.

Shwe Taung

Group

Yangon’s retail market – Key upcoming malls


Photo Name Size (GLA) Description Size (GLA)

Junction City

(opening March

2017)

93,244 sq ft

New high quality development

including retail podium, office

tower and Pan Pacific hotel.

Shwe Taung

Group and

Keppel Land

Time City

(expected to be

opened in 2017)

96,718

sq ft

5 storey retail podium with

850 shops, plus office tower.

Crown

Advanced

Construction

Co., Ltd.

Kanthayar

(opening 2017)56,000 sq ft

Retail podium to service 5*

hotel, grade A office tower,

serviced apartments and

luxury condominiums above.

Asia Myanmar

Shining Star

Co., Ltd.

(AMSS)

Yangon’s retail market – Future outlook


• Retail likely to continue to perform well over the next few years

• Supply will increase

• But more foreign brands will enter the market

• Growing consumer class

F&B in Yangon – Fast food brands


F&B in Yangon – Other popular brands


Operating Conditions – Retail mall F&B units


Positives Negatives• Facilities in-built, e.g. exhaust ducts

• Sufficient power and water

• Garbage disposal / collection systems

• Footfall traffic

• Better open-plan space

• Monthly/quarterly rental payments

• No issues with neighbours

• Parking provision

• Lacking character

• Higher rents

• Not many malls

• Not many available units

• Very few malls allow sale of alcohol

Operating Conditions – Stand-alone units


Positives Negatives

• More character – heritage

buildings

• Lower rental levels

• More choice re: location

• Potential for difficult neighbours – permissions needed

• Rent usually required 1 year upfront

• No liquor licenses for units near pagodas, monasteries or

schools

• Power issues

• Lack of water supply

• Communal back of buildings can often be unsanitary

• May need to install kitchens and bathrooms

• No footfall

• Limited parking

Operating Conditions – External factors


• Very few cold storage premises/companies currently operating

• Difficult regulatory environment – interpretation can vary from township to township

Operating Conditions – Capex

• If rent required 1 year upfront, can represent 30-40% of capex

• Liquor Licenses: $7,000 - $10,000 plus annual renewal fee

• Will need to import kitchen equipment

• Furniture is expensive and poor quality

• Fit out and licensing costs = c.$80-$100 per sq ft for a good quality restaurant/bar

About Slade Property Services


• Founded in 2013 by Hugo Slade, a British Chartered Surveyor

• Registered with and regulated by the Royal Institution of Chartered Surveyors (RICS), guaranteeing the highest

ethical and professional standards

• The only company in Myanmar with two employees who are fully qualified members of the RICS and RICS

Registered Valuers

• Our services include:

• Market Research

• Valuation & advisory

• Development consultancy

• Sales, marketing and leasing, on behalf of

both landlords and tenants/purchasers

• Investment and joint venture advisory

• Property and facilities management

• We specialise in:

• Residential

• Office

• Retail

• Industrial

• Development land

• Hospitality (hotels and F&B)

• Education

For more information, please contact:


Hugo Slade, BSc (Hons) MRICS

Managing Director

Phone: +95 (0) 1 381609

Mobile: +95 (0) 9 421058866

Email: [email protected]

Verity Ramsden, BA (Hons) MSc MRICS

Associate Director – Valuation & Advisory

Phone: +95 (0) 1 381609

Mobile: +95 (0) 9 260020299

Email: [email protected]

Address: Unit #1-05A | MWEA Tower | 288/290 Shwedagon Pagoda Road | Dagon Township | Yangon | Myanmar

Website: www.sps-myanmar.com

mailto:[email protected]

mailto:[email protected]

Yangon’s F&B market A real estate...

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