More supply and fewer foreign renters have caused rental prices in the high-end expat Yangon property market to fall, according to real estate industry figures – but a lack of data means the extent of the drop is hard to quantify.
More landlords furnishing apartments to appeal to foreigner workers, the changing nature of the expat renting class and a drop in the number of foreigners looking for apartments were all listed as factors.
Daw Moh Moh Aung, general secretary of the Myanmar Real Estate Services Association, estimated that prices are down some 20 percent compared to 2014, a view that was confirmed by local estate agents.
Some condos on Kyun Taw Road in Sanchaung township would have rented for K2.2 million a month in 2014, but the price has dropped to K1.6 million, said Daw Nilar Kyaw, owner of Aye Yeik San Estate Agent.
Foreign real estate firms operating in Yangon agreed that in the high-end market aimed at foreigners prices had come down.
“We’ve definitely seen a drop in rental prices over the last 12 months,” said Verity Ramsden, head of valuation and advisory services at Slade Property Services.
Another foreign real estate firm felt 20pc was a “reasonable” estimate. But Richard Emerson, country manager of Savills Myanmar, said a lack of data on price movements made putting a percentage figure on the decline impossible.
There has been “quite a drop” in prices across properties renting for $2000 a month and upward, he said. However, it would be “wildly inaccurate” to say that prices had fallen 20pc across the expat rental market, he added.
There is no reliable source of price data on residential rental prices in Yangon. But even if there was, “huge variance” across that sector would mean that no single figure could usefully reflect the state of the market, Mr Emerson said.
Rental prices in the high-end market that caters to foreigners differ hugely due to factors like location, furnishings and the renter’s preference, he said. The latter two factors mean the rental price for one apartment can be twice that of another with the same number of rooms in the same building, he added.
Real estate industry figures did agree, however, that a larger number of available properties targeted to foreign workers had contributed to the price decline.
This increase in supply is because landlords are more willing to spend money decorating and furnishing properties to make them appeal to expats, said Daw Nilar Kyaw. “There are so many [more] properties on the market and foreigners can pick and choose as they like,” she said. “That’s why the rental prices are falling.”
Landlords have become “more savvy” in adapting properties to suit expat expectations, said Ms Ramsden, adding that with more expat friendly options available some tenants have even been able to renew leases at lower prices in recent months. Landlords have started to become flexible on payment terms. Some are now willing to accept bi-annual or even quarterly payments rather than the traditional 12 months up-front, Ms Ramsden said.
But there was less consensus over whether fewer expats seeking rental properties had pushed down prices.
Daw Moh Moh Aung said many foreign workers had returned home in 2015, and Daw Nilar Kyaw felt there were fewer expats looking for properties so far this year Mr Emerson said a considerable number of foreign workers left Yangon in 2015. “Where they would be replaced under normal conditions, that probably didn’t happen due to the election process,” he said, referring to last November’s election.
He also noted a cycle where large international firms entering Myanmar train local staff using expats, who leave once training is complete.
Ms Ramsden, however, said the drop in rental prices in the past 12 months was down to the increase in available properties, not fewer expats in the market. Although the willingness of landlords to compromise on payment terms could be partly due to a “different type of expat tenant” entering the market, she said.
“Previously, lots of expats were being sent to Myanmar by big companies, embassies and NGOs, with their whole housing allowance paid for and dealt with by their employers,” she said, “meaning they had no need to barter or negotiate terms.”
Together with a lack of supply this left the bargaining power with the landlord. But as suitable housing supply has increased, so too has the influx of expats from smaller firms and organisations that are responsible for their own housing costs.
“They have a direct interest in getting the best rent and rental terms possible,” she said. “As a result we’ve gone from a landlord’s market to something a bit more balanced.”
Credit: Myanmar Times