Lower grade apartments offer strong potential Summary • Midtown continues to dominate serviced apartment market • Wide variations in Grade B pricing and quality • Emergence of aparthotels beginning in Yangon • One-bedroom units command significantly higher rental rates per square metre

1. Myanmar | research reports
Yangon
SERVICED APARTMENT MARKET REPORT H1 2019
Lower grade apartments offer strong potential
Summary
• Midtown continues to dominate serviced apartment market
• Wide variations in Grade B pricing and quality
• Emergence of aparthotels beginning in Yangon
• One-bedroom units command significantly higher rental rates per square metre
HISTORICAL SUPPLY OF SERVICED APARTMENT UNITS IN YANGON
Source: Picon-Deed Research
Note 2014 – The number of units on the market fell after the closure of Grand Mee Ya Hta in Downtown
(500)
-
500
1,000
1,500
2,000
2,500
3,000
2013 2014 2015 2016 2017 2018 2019 est 2020 est 2021 est
Units
Supply at start ofyear New supply

2. Yangon Serviced Apartment Market Report H1 2019
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INTRODUCTION TO YANGON
For the purposes of this report the city has been
divided into four zones that are geographical
amalgamations of existing townships.
Downtown represents the initial historical commercial
centre of the city due to the location of the river ports.
Despite Yangon growing quickly, the zone continues to
represent the main central business district (CBD)
although currently no serviced apartments exist in this
zone. With future developments in the pipeline and a
planned 64-acre Yangon Central Railway Station
redevelopment, the CBD status is set to continue for
the foreseeable future with serviced apartments
playing their part.
The Inner City contains five townships to the north of
the downtown zone in an area that is highly popular
with expats.
Further north is the Midtown zone, which contains
more land for development and includes many
serviced apartment complexes that have been
completed in the last five years.
Cheaper residential options can be found in the Outer
City area, which contains lesser-known townships on
the periphery of the city. As Yangon has developed,
these areas have followed suit and will continue to be
attractive to real estate developers due to lower land
prices. Public transport infrastructure will have a huge
bearing on the relative success of these locations.
SUPPLY
SUPPLY OF SERVICED APARTMENT UNITS BY
ZONE
Source: Picon-Deed Research
The most interesting fact regarding supply by location
is the absence of any serviced apartments in the
Downtown zone since the closure of Grand Mee Ya Ta
to make way for the Yoma Central project. Midtown is
by far the main location for serviced apartments due to
its centrality and proximity to many of the international
schools preferred by expats.
Overall the number of units is due to surpass the 2,000
mark by the end of 2019. Significant new supply is
expected to be added in 2020 with the opening of
Somerset Kabar Aye and the extension of Summit
Parkview.
DEMAND
Occupancy levels are generally robust for both grades
in Yangon, averaging 82%. However, Grade B
apartments have wider variances in terms of quality,
facilities and pricing compared to Grade A, which is
more closely based on international standards and with
a growing level of branding. Therefore, the standard
deviation of occupancy levels for Grade B apartments
are much higher than those attributed to Grade A.
Inner City
25%
Midtown
66%
Outer
City
9%

3. Yangon Serviced Apartment Market Report H1 2019
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OCCUPANCY AND STANDARD DEVIATION FOR
SERVICED APARTMENTS BY GRADE
Source: Picon-Deed Research
Demand for Grade A apartments comes mainly from
expats working at a senior level for multinational
companies, embassies and NGOs. Due to the fact that
such expats are likely to bring families; the need for
larger sized units, often in the three-bedroom category,
are in demand. As such, proximity to the high quality
international schools is a main determinant of the
popularity of 3-bedroom serviced apartments.
The picture is more mixed for Grade B apartments,
where tenants are more likely to be single and on a
much lower housing budget more in line with smaller
studios or one-bedroom units. Locations closer to
shopping and entertainment are key considerations. A
number of Grade B serviced apartments have high
rental rates that are out of kilter to the wider market,
where rates have been falling year-on-year for the past
three years; as such those complexes have far lower
occupancy rates.
RENTAL RATES
AVERAGE RENTAL RATES OF SERVICED
APARTMENTS BY GRADE
Source: Picon-Deed Research
The general supply of larger three-bedroom units on
the market for both serviced apartments and
condominiums for rent means that rental rates per
square metre are considerably lower than for smaller
one and two-bedroom units. Grade A serviced
apartments are considered to be of international
quality with a more consistent level of quality,
especially with the introduction of international brands.
There is a greater variation in terms of quality for
Grade B serviced apartments and rental rates also vary
significantly.
UNIT CONFIGURATIONS
The market for studio and one-bedroom units is
geared toward expats on lower housing budgets than
is the case for three bedroom units in higher grade
serviced apartments. Expat embassy staff, a significant
number of NGOs and top executives of multinational
companies have housing budgets starting from 5,000
USD and even single occupants in this category will
take larger units fitting their generous budgets, rather
than downgrade.
A number of more affordable serviced apartments are
refurbished older buildings, with unit configurations
that are not fit for purpose, inefficient layouts and sub-
optimal facilities. However, even new builds have not
been developed with practical space allocation in
mind. Although the trend is towards more minimalist
design and sleeker furniture, just a small number of
units can be categorized as truly space-saving.
Only a limited number of units can be considered
hybrid hotel design, although a number of future
developments will focus on the aparthotel concept that
is increasingly popular globally. The average unit
configuration in Yangon has been repositioning away
from the three-bedroom dominance that existed five
years ago.
Since then more mid-end apartments have been
developed with a larger number of one-bedroom units;
the recent extension of Sakura Residence added a
significant number of one-bedroom units, with no
three-bedroom units. However, compared to Bangkok
the distribution of three-or-more-bedroom units is still
high, making up 30% of supply in this category,
compared to 7% in Bangkok. The other key difference
is the proportion of studio units, which is far higher in
Bangkok than Yangon.
0
5
10
15
20
25
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
Grade A Grade B
StandardDeviation
AverageOccupancy
Average Occupancy Occupancy Standard Deviation
USD 0 USD 10 USD 20 USD 30 USD 40 USD 50 USD 60
1 bedroom
2 bedroom
3 bedroom
Rent per sqm per month
Grade B Grade A

4. Yangon Serviced Apartment Market Report H1 2019
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UNIT CONFIGURATION OF SERVICED
APARTMENTS IN BANGKOK AND YANGON
Source: Picon-Deed Research
Another comparison would be the condominium
market in both cities as they also offer competition in
the rental market. In Bangkok, where there are no car
parking requirements, many small studios and one-
bedroom units are available for sale and are popular
with young families setting their first foot on the
property ladder and those wishing to lease to mostly
foreign workers. Unit sizes can be as small as 22 square
metres for studios and 30sqm for one-bedroom units.
In Yangon most condominium units are large, with
three or more bedrooms per flat. This is partly
historical: families want to house extended family
and/or household help, which is a trend that should
decline in coming years, but also legislative. Current
building regulations force developers to provide at
least one parking space per unit, which makes smaller
unit sizes difficult to feasibly develop. Additionally, the
quality of construction, maintenance and facilities are
far superior in Bangkok compared to Yangon. Foreign
renters have had far from satisfactory options in
Yangon where units are big on quantity but low on
quality. This is often opposite to expat requirements
and is one of the most serious issues for foreigners
living in Yangon.
The expat market is expected to grow as the economy
continues to develop. Investors should be mindful of
the different housing budgets and also on the room
design, facilities and pricing of lower grade non-
branded residences that offer good potential in the
coming years.
The Myanmar Real Estate Specialists
• Tailor-made research
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Contact email: picondeed@gmail.com
Unit 1408, Sakura Tower,
339 Bogyoke Aung San Rd
Kyauktada Township, Yangon
Studio, 26%
1 Bed, 44%
2 Bed, 23%
3 Bed,
6%
4+ Bed, 1%
BANGKOK 2010
4+ Bed
Studio
9%
1 Bed
40%
2 Bed
21%
3 Bed
27%
4+
Bed
3%
YANGON 2019