Myanmar, formerly known as Burma, has been much hyped as the final frontier of foreign investment – a hitherto untapped market of 60 million in between the two most populated countries in the world. Such clichéd terms are often thrown around in any article one comes across when researching on how to invest in Myanmar. What is less effectively communicated is that Myanmar is an emerging market of the extreme variety. Nothing can be taken for granted here; not the electricity, not the contract with your local business partner, not even the roof over your head. That’s right, contrary to common expectations, despite the low cost of living in general, property prices in Yangon are on par with Singapore, Hong Kong and Manhattan. The purpose of this article is to advise readers on the best way to set up shop in the brave new world that is Myanmar.
Yangon’s commercial real estate
Table 1a shows the most recent statistics for Grade A commercial space in Myanmar in Q1 2014.
Just these two buildings in downtown Yangon – Sakura Tower and Centrepoints – contribute up to 75 percent of what is termed Grade A commercial space in the entirety of Myanmar.
Table 1b shows prominent additions to Yangon’s future supply.
Due to the low amount of total available supply, it is clear why prices are so high. Table 2 illustrates costs in Yangon as compared to Singapore.
New projects are in the pipeline but construction will be delayed for a variety of reasons: Disputes over the ownership of the land due to unclear title; lack of skilled personnel; lack of imported materials; zoning laws which are still evolving and slower work during the monsoon season.
What type of customer are you?
Given the operational difficulties of setting up an office in Yangon, many firms will find the “plug and play” aspect of serviced offices attractive. However, are they the best choice for you?
Table 3 organises different types of companies based on how image-conscious they are and whether their clients meet them in their office.
• Box A (image conscious – customer visit office quadrant) shows companies who are the most likely clients of serviced offices. They require an office that projects an image of professionalism and prestige to their customers as their clients visit their office.
• Companies in Box B (image conscious – customer do not visit office quadrant) may not have as many visitors, although they still require an office that befits their image. It need not be a traditional tower block or in the central business district.
• Box C (image not priority – customer visit office quadrant) consists of the service companies such as trading and distribution companies that import their own products or represent a multitude of brands from overseas.
• Industries in Box D (image not priority – customer do not visit office quadrant) would find it easiest to acquire office space because they have the least demanding criteria.
The second and final instalment of the article will present more analysis on the serviced office sector in Yangon, scope of future supply and prices and alternative to standard commercial space.
Kevin is studying Politics and International Relations at the University of York in the UK. This article is a result of a project that Kevin was involved in while working at Consult-Myanmar Co Ltd in Yangon. Any views or opinion expressed in this article is the author’s own and don’t reflect Myanmar Business Today’s editorial opinion.
