Yangon was originally a small fishing village founded in the 11th century around the Shwedagon Pagoda, that continues for over 2,500 years to remain a significant religious and tourist attraction within the city. The Pagoda is important in Myanmar Culture, and it is essential that the height of developments within the city are restricted so that they do not exceed the height of the Pagoda.
Most of the development of Yangon as a commercial capital occurred during its time as a British Colony from the 19th century to Myanmar’s independence in 1948. Since independence, real Estate development projects occurred slowly but accelerated following civilian rule in 2011 and the lifting of international sanctions. This development of real estate has continued in Yangon.
Development has been spurred forward by the Myanmar Central Government. The Government continues to encourage foreign investment and business developments, recent highlights are: finalizing legislation which will allow foreigners to own a maximum of 40% of a condominium development, amending the Myanmar Companies Law so foreigners can own up to 35% of a Myanmar company and remain a Myanmar company, this law is scheduled for enactment in August 2018.
One of the latest milestone developments in Yangon is the Kantharyar Centre, scheduled for completion in mid-2018, developed by Asia Myanmar Shining Star Investment Co. , Ltd. (“AMSS”). The Kantharyar Centre will consist of four towers; a 5A class office tower – the first in Yangon, a Wyndham 5-star hotel, a 23-storey residential tower and a serviced apartment tower, all interconnected by a 2-storey 6,000m2 international standard shopping mall.
The Kantharyar Centre is situated within the new developing heart of Yangon on the south-eastern edge of Kandawgyi Lake, a picturesque tourist attraction and recreation spot, along Kan Yeik Tha Road and U Aung Myat Road. On completion in 2018, Kantharyar will have views overlooking the Kandawgyi Lake and of the Shwedagon Pagoda. The area is predominantly residential, but is also home to the Union Business Centre and a number of hotels. Its location will avoid much of the noise and traffic congestion associated with the older areas of the city.
At the start of this century, demand across all real estate sectors, especially for properties meeting international standards, dramatically outstripped supply, leading to record high prices. As an example, the Shangri-La residence (serviced apartment) reached a 2013 rental high of $450/m2, exceeding the rental of the most expensive hotel in New York City; The Pierre Hotel at $440/m2.
Not surprisingly, with the government encouraging investment and record high prices, the laws of economics kicked in, leading to a boom in property development within Yangon and often in close proximity. Creating the now too familiar traffic congestion problems affecting ingress and egress to many of the new developments that the location of the Kantharyar Centre avoids. This surge in supply of properties has led to the point that supply sectors have outpaced demand, leading to a softening in prices.
While prices have softened and fallen significantly from the past highs, prices nevertheless remain higher compared to most other Asian countries. This softening has allowed buyers and lessors to become more discriminating with the quality of properties, preferring properties meeting international standards, an advantage of the Kantharyar Centre offers as the first grade 5A office tower in Yangon and the newest residential and serviced apartment units. The Kantharyar Center will make parking easier with the provision of 600 parking spaces.
While prices have softened and fallen significantly from the past highs, prices nevertheless remain higher compared to most other Asian countries
Until 2017, the growth of international standard service apartment supply was slow with only 750 units added between 2013 to 2017, increasing the total supply to 1,500 units. This meant that demand vastly outweighed supply, particularly from foreign companies entering the Yangon market and seeking rental units for their foreign employees
Because of this imbalance, rents and occupancy rates have remained high, making serviced apartments a viable property investment. Consequently, investors took advantage of this opportunity and 450 units were added in 2017, amounting to over 50% of that added over the entire period of 2013 to 2017. The largest addition was Daewoo Amara with 321 units. By the end of 2019, an additional 1,196 units will become available. Kantharyar will add 171 modern serviced apartment units offering tenants direct access to a modern shopping mall, Kandawgyi Lake and Shwedagon Pagoda views.
Historically, international office space has been in short supply; Sakura Tower on Sule Pagoda Road was for a long time the only office tower offering comparable international standards in Yangon. As a result, Sakura Tower attracted very high rental values. However, over the last three years, new office supply has been added allowing tenants to have more variety and achieve higher quality. Currently, the major commercial towers net leasable areas are; Sule Square 30,000m2, Myanmar Plaza 81,000m2 and Junction City 34,000m2. The Kantharyar Center will add an additional 38,000m2 of international standard office area.
The heart of downtown Yangon is home to a number of landmarks including Sule Pagoda, Mahabandoola Park, Independence Monument, City Hall, Scott’s market and the Yangon Stock Exchange. The British built this area using a grid road pattern meant for a much smaller population. As Yangon has grown in the last few years, traffic congestion has worsened, especially at peak times, increasing travel time for both tenants and their clients. The Kantharyar Center in the newer part of the city will improve travel times.
Modern retail space within a modern shopping mall is a relatively new development in Yangon. This development has occurred only over the last five years. The prestigious retail spaces within a modern shopping mall are Sule Square 6,000m2, Junction City 23,000m2, Myanmar Plaza 32,000m2 and soon the Kantharyar Center that will add 6,000m2.
The two retail sectors that increased in supply significantly with the development of modern shopping malls were the supermarkets and chain food outlets. In terms of supermarkets, City Mart Holdings – Marketplace and City Mart branded outlets, are the largest international style supermarket chains in Yangon. The first City Mart outlet opened quite recently in 2011 and since has rapidly expanded to reach 20 outlets. Many international exclusive brands have opened outlets at all the major mall developments. The Kantharyar Center offers the opportunity to secure prime retail floor space no longer available in other shopping malls. In addition, international five star hotels are associated with the development of retail space. These associations are Sule Square with Shangri-La Hotel, Myanmar Plaza with Melia Hotel, Junction City with Pan Pacific Hotel and the Kantharyar Centre that will have the first Wyndham Hotel in Yangon.