Supply of large, high-end apartments up even as demand for small units rises




【The Myanmar Times】

The completion of Lotte Serviced Apartments in September has led to a 19 percent spike in existing supply, a record high since 2013, according to research firm Colliers International.

There are now 1,900 apartment units mostly in Yangon and 70pc of these projects are considered upscale, Colliers International reported this month.

Among these, Shangri-La Serviced Residences and Lotte Serviced Apartments are classified as premium properties. Lotte Serviced Apartment features the highest number of amenities and facilities across all serviced apartments.

By 2020, Colliers expects serviced apartments in Yangon Inner City Zone to represent more than half of available supply. “Bahan and Yankin townships remain [the most] popular locations, with the majority of these projects still positioned as upscale,” said Tin Thandar Oo, an analyst at Colliers International.

The substantial rise in supply may lead to a considerable surplus starting in 2019 and through 2020, she added.

However, while demand for higher-end apartments is expected to catch up with supply over the longer term, it is the lower-tier projects such as studio and two and three-bedroom units that will likely see more buying activity over the shorter term, said Joan Mae Lee, another analyst Colliers International.

In addition, demand for studios and one-bedroom units remains underserved and will likely see higher demand due to their affordability. “The supply of studio units in Myanmar appears meagre and the number is in fact substantially lower than nearby Bangkok”, Ms Lee. In most Yangon serviced apartments, this unit type is generally almost fully occupied given its relatively small representation in the market. Likewise, they are also leased out much faster than those with more bedrooms.

“The overall unit mix among comparable cities in the region favors smaller sizes, preferred by many single and couple expatriates,” she said.

Currently though, both two and three bedroom apartments still represent a sizeable share of the total market.

In the meantime, the citywide occupancy has remained generally healthy over the past quarters. However, a drop is expected in the third quarter of this year following the completion of Lotte Serviced Apartments. 

“Looking forward, we expect occupancy rates  gradually increasing as probable delays in construction mean an absence of new supply in the next two years”, said Ms. Lee. 

She cautioned though, that the majority of these condominiums remain unsuited to current demand, with units geared towards the larger unit sizes.

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