The office market in Yangon was slow to react to the economic reformation of Myanmar and the subsequent increased levels of demand from both national and international occupiers. As a result, office rents are higher than most major established locations around the world, with 2014 rents sitting higher than anywhere other than Beijing and Shanghai.
Rents have now been through a market correction as supply increased dramatically and demand never reached the expected over-hyped levels that many developers were hoping for. New developments have continued to complete since 2012 with new supply slowing down from 2017, allowing demand to catch up with existing supply.
New supply has, and continues to, largely improved the overall quality of office stock, with the majority of Grade A buildings in Yangon being built since demilitarisation. Most current and future Grade A developments have focused on the Downtown or Inya Lake areas which both continue to be popular with multinational companies for a variety of reasons.
As overall quality improves, and rents continue to fall from the astronomical heights of 2014, multinational tenants have begun moving away from low quality and residential villa spaces, and towards more practical and conventional office buildings.
We now enter the next supply cycle with many new large-scale projects due for completion from 2021 onwards which will put downward pressure on rents unless there is a surge in demand from new government legislation, easing of restrictions and improving the ease of doing business in Myanmar further encouraging FDI.