RETAIL MARKET OVERVIEW

The current Retail Market in Yangon is mostly made up of local retailers, with a few international retailers increasingly moving into the market as Myanmar continues its transition, and more disposable income becomes available to its consumers. The majority of international retailers in Myanmar are entering the local market, not by making an official move into the country, but through partnerships, joint ventures and franchises with local partners who are distributing their products, easing the process of companies gaining a presence in the Myanmar market – although potentially lessening profit margins. The majority of retail property consists of high street, locally-owned individual shop units on the ground floor of residential or office buildings. There are, however, an increasing number of modern retail outlets that contain major local and international. If all new retail developments go ahead as planned, Yangon’s modern retail supply will more than triple in the next 4-5 years.

The retail market is currently a severely undersupplied real estate sector. The existing retail centres enjoy very high occupancy rates and retail pedestrian foot fall is very high. However, there is very little variety among retail centres, with most shopping locations containing the same or similar tenants.

In the short to medium term, as new developments are completed, rental rates at new developments are set to increase significantly, in recognition of the fact that they will be the best and newest retail locations in town and there is so little supply of a good quality level. Tenants will be likely to pay very high rents. As more supply gets completed, however, in the medium to long term, it is difficult to see how this rental rate will be sustainable and how retailers will be able to achieve sufficient revenue to continue paying these exorbitant rents. The market is therefore likely to see increased vacancy rates and a marked readjustment in rental levels in the next 3-5 years.

The current Retail Market in Yangon is mostly made up of local retailers, with a few international retailers increasingly moving into the market as Myanmar continues its transition, and more disposable income becomes available to its consumers. The majority of international retailers in Myanmar are entering the local market, not by making an official move into the country, but through partnerships, joint ventures and franchises with local partners who are distributing their products, easing the process of companies gaining a presence in the Myanmar market – although potentially lessening profit margins. The majority of retail property consists of high street, locally-owned individual shop units on the ground floor of residential or office buildings. There are, however, an increasing number of modern retail outlets that contain major local and international. If all new retail developments go ahead as planned, Yangon’s modern retail supply will more than triple in the next 4-5 years.

The retail market is currently a severely undersupplied real estate sector. The existing retail centres enjoy very high occupancy rates and retail pedestrian foot fall is very high. However, there is very little variety among retail centres, with most shopping locations containing the same or similar tenants.

In the short to medium term, as new developments are completed, rental rates at new developments are set to increase significantly, in recognition of the fact that they will be the best and newest retail locations in town and there is so little supply of a good quality level. Tenants will be likely to pay very high rents. As more supply gets completed, however, in the medium to long term, it is difficult to see how this rental rate will be sustainable and how retailers will be able to achieve sufficient revenue to continue paying these exorbitant rents. The market is therefore likely to see increased vacancy rates and a marked readjustment in rental levels in the next 3-5 years.