Condo and retail developments in Myanmar cities

An expansion of retail space in urban centres is currently under way in Myanmar, as the country targets the creation of “destination” malls, similar to those that have proved popular in much of South-east Asia. In Yangon, Myanmar’s commercial centre, total retail stock stood at an estimated 171,078 sq metres of leasable space at the end of the first half of 2015, according to the real estate firm Colliers International Myanmar, a figure that has not increased since 2014.

Retail Expansion

Now, the addition of the HAGL Myanmar Plaza, which opened its doors in December 2015, will add a substantial 38,364 sq metres of leasable retail space to the portfolio. Built by the Vietnamese firm, Hoang Anh Gia Lai Group, as part of its luxury $500m mixed-use development, Myanmar Centre, the mall will be the city’s biggest shopping destination.

In 2015, in anticipation of the opening of the HAGL Myanmar Centre, existing malls, which once had little in way of competition, began to renovate. Sule Plaza (formerly Myanmar Shopping Centre) was upgraded in the first quarter of 2015 to attract new tenants – including foreign brands. The Junction Centre Group, which has a number of malls in Yangon and is controlled by Shwe Taung Development, has spruced up some of its properties, including its flagship 27,000-sq-metre shopping centre, Junction Square, which draws more than 4.5m shoppers a year and opened in 2012. Meanwhile, Sule Square, next door to the Sule Shangri-La in the city centre, will reopen after new construction on podium retail in its office tower in the first half of 2016.

Nevertheless, Yangon has a considerable way to go before it catches up with the retail experience on offer in other South-east Asian cities. The Asia-Pacific retail market is the world’s largest and the malls of Bangkok, Singapore and Kuala Lumpur offer their customers attractive environments in which to shop, with comfortable places to sit, utilising “lifestyle” elements such as cinemas, ice rinks and children’s activity centres, with the aim of encouraging people to spend more time – and more money – at the mall.

Market Prospects

Myanmar, according to a Prudential report on South-east Asia’s retail market, remains “pre-institutional” in terms of its offerings, which means that retail remains street-based and dominated by local owner-occupiers. In a country where about a quarter of the population live below the poverty line, many shoppers are focussed on the necessities of day-to-day life.

Accessibility is also an issue for Yangon’s malls, especially as the city has banned motorcycles and scooters, leaving people reliant on buses and other forms of public transport. “In terms of retail locations, the lack of infrastructure impacts the shopping malls which customers decide to use,” Daw Sandar Htun, managing director of Shwe Taung Development Company, told OBG. “Normally the catchment area is between two to four miles but, in many instances, people opt for another shopping mall due to the route of the bus line.”


Nevertheless, some foreign firms are testing the waters. In the food and beverages market, franchises have become a preferred way to enter Myanmar. KFC opened its first store in June 2015, the Singaporean chain Pastamania is expected to open in the second quarter of 2016 and Pizza Hut, another US brand, opened its doors in November 2015.

Yangon’s wealthy prefer to do their shopping overseas, and that is unlikely to change, but as more of the city’s workers see their incomes rise, creating a whole new middle class, they will want to try for themselves the brands that were once out of their reach. With some 125,000 sq metres of retail space due to open in Yangon between 2016-18, this should, according to Colliers International Myanmar, encourage not only more franchisees, but also more mid-tier brands to set up shop in Myanmar’s biggest city.


Since Myanmar opened to foreign investment, much of the focus in the country’s residential property market has been on condominiums, which have sprung up mainly in Yangon, but also in secondary cities such as Mandalay.

Prices have surged since 2011, with developers selling units off-plan to finance the costs of construction, and buyers looking for new modes of investment. But delays to the long promised Condominium Law, which has been in development for a number of years, dampened activity in the sector in 2015, leaving some off-plan developers without enough funding to complete their projects.

“The government needs to be more rigid with certain policy,” U Zau Man Lahtaw, managing director of Myanmar Seilone Group, told OBG. “Changing regulation too often can reduce the confidence of buyers which, in turn, can result in a slow down of the construction of projects.”

Foreign Ownership

One of the most important aspects of the new condo law, which is still being debated, is that its introduction should, for the first time, allow foreigners to own property in Myanmar, giving them the right to buy around 40% of any building that has been classified as a condominium. A legal definition of a condominium is also to be provided.

The draft law currently states that high-rise residential buildings cannot be classified as condominiums if they are built on less than one acre of land. This restriction would rule out a large number of projects that many believe should be classed as condominiums. The legislation is also expected to include provisions regarding the construction process and the responsibilities of those involved, and it will also introduce the concept of communal management.

However, due to concerns about the implications of the legislation and also by the preparations for the elections, the law has been subject to long-term delays. Industry experts, in statements to the press, have predicted that the eventual passage of new legislation is likely to breathe new life into the property market.

Mark Petrovic, managing director of architecture and engineering consultancy Archetype Group, told OBG in August 2015, “The property market has slowed down in the last eight months, partly due to the fact that hype has simmered and foreign arrivals have decreased; but, after the election, demand and foreign interest will pick up again, leading to a price hike.”

Affordable Housing

Real estate experts note that potential also lies in affordable and mid-range housing projects due to Myanmar’s growing population, which is expected to increase from its current level of more than 50m to reach some 90m people by 2040 (see analysis). In Yangon, the number of residents is growing by more than 6% a year and is set to nearly double by 2035 to 9.7m people from just over 5m in 2013, according to the local press. Household income is also forecast to expand four times over the same period.

These factors are likely to push up residential property demand, with the government estimating annual demand for housing at 300,000 units, much of which is likely to be built in new townships away from the city centre. The national government budgeted $100m for 2015/16 to construct ten affordable housing projects with a total 18,000 units, across the country, according to the local press. Seven of these projects will be situated in Yangon, which has an affordable housing stock of just 17,000 units.

Private Sector Stake

Although the projects are primarily being built by the Yangon City Development Committee (YCDC) or the Ministry of Construction, there are also opportunities for private sector involvement. Singapore’s Surbana, which has its roots in Singapore’s Housing and Development Board – the agency that built the city-state’s public housing estates – is managing an affordable housing project in Dagon Seikkan Township, in partnership with the government of Myanmar. The project involves the construction of more than 10,000 low-cost housing units. Surbana is involved in the development’s master planning, as well as the architectural design and civil and structural engineering.

Some of Myanmar’s smaller developers have done well by focusing on the construction of apartments targeted at city-dwellers who have seen their income rise and want to upgrade to a more modern property.

But financing remains an issue for developers and buyers. The Construction and Housing Development Bank, which opened in 2013, was the first to provide loans to firms building cheaper apartments, as well as to buyers, but developers complain that costs remain high. The bank itself says it lacks the capital to provide loans for longer tenors. Its longest loan is repayable over four years.

There is also potential in one- and two-bed-roomed units that typically would appeal to the substantial number of foreigners living alone in the country. Such units need not be serviced apartments – Yangon already has a stock of about 900 of these – but instead should be well built and have facilities such as swimming pools or gyms in order to attract the demographic. There are some difficulties in constructing smaller units due to onerous parking space requirements.

The Hotel Industry

Myanmar’s reforms and its gradual move towards a democratic political system has attracted a new wave of foreign travellers to the country. Tourist arrivals reached 3.08m in 2014, up from 2.04m in 2013 and 791,505 in 2010, according to the Ministry of Hotels and Tourism (MHT). This rapid expansion has triggered a wave of investment in tourist infrastructure, led by domestic investors, according to a report by PwC. There is plenty of potential for foreign investment too. Following the introduction of the 2012 Foreign Investment Law, foreign companies are now permitted to fully own hotels in Myanmar which have been classified above three stars. Foreign investment in smaller-scale properties is also encouraged through joint ventures with local partners.

Companies from the Asia-Pacific region remain the largest tourism investors in Myanmar, but additionally, some of the world’s most well-known Western hotel operators, including France’s Accor, Switzerland’s Kempinski and Spain’s Melia, are expanding their portfolios in the country or are opening hotels for the first time.

Total foreign investment in hotels was $2.6bn in 2014, and was led by Singapore and Vietnam, according to the MHT. The Hoang Ang Gia Lai Group’s $550m mixed-use development in Yangon will include a 400-room hotel – Melia Yangon. In 2015 Colliers predicted more than 1009 new upper-scale hotel rooms to hit the Yangon market in 2015, and expects to see additional 1580 rooms by 2016. With so many new hotels opening, long established operators are being forced to improve the quality of their offerings. Demand for quality accommodation is also increasing beyond Yangon. Travel experts in Bagan say more rooms are needed in the city, where the number of visitors rose by as much as 15% in the most recent season.

Legislation Delays

Land ownership and property rights in Myanmar remain unclear and, particularly in the case of older buildings, questions of ownership can be hard to resolve.

The country has various classifications for land, which are detailed in as many as a dozen separate land laws, according to the law firm VDB Loi. A foreign invested company in Myanmar does not have any land use rights, unless it secures long-term approval from the government or the lease is less than a year in duration. According to U Toe Aung, director of the Urban Planning Division at the YCDC, a National Land Use Policy is currently being drafted that should increase the transparency of land information and help make the system fairer. It should also make committing fraud more difficult. Moreover, building permits, which previously took so long to be issued that contractors sometimes went ahead without securing the necessary approvals, are now being issued much more quickly. The YCDC is also hoping that an online applications process that was initiated in 2015 will help to increase efficiency.

In terms of construction permits, Myanmar rose 10 places in the World Bank’s 2016 “Doing Business” survey, to 74th place. The survey noted that, while it took roughly 95 days to obtain a permit through a process which involved 14 different procedures (better than in East Asia and the Pacific as a whole), costs were considerably higher.

Myanmar remained in 145th position in terms of registering a property, with the process taking 85 days and costing about 5.1% of a property’s value compared with 74 days and 4.4% for the broader region. The annual survey measures the performance of 189 economies across the world.

Ensuring Balance

Regulations are also being refined in relation to heritage buildings. Even though some 40% of the old town of Yangon was destroyed during military rule, it remains one of South-east Asia’s best preserved cities and a considerable draw for tourists.

A new Heritage Protection Law is currently in the works which, once implemented, will require that projects built close to old buildings and pagodas first obtain special approval from the Department of Archaeology, National Museum and Library. This has been designed to put a stop to historic buildings being demolished by developers which claim the buildings are dangerous. In this respect, according to U Toe Aung, the authorities wish to achieve a balance. Some 189 buildings have already been designated as in need of protection.

Indeed, the cancellation of the Dagon City project which was to be built close to the Shwedagon Pagoda in July 2015 shocked many investors and rattled the property market. Dagon City was cancelled by outgoing president U Thein Sein, amid mounting public opposition to the development due to concerns that the project would affect the views of the temple and damage its foundations.

However, since then, the government has been keen to allay investors’ concerns. The authorities have pledged compensation for losses incurred and are promising to look for alternative development sites for the developers. ”There’s a genuine debate going on and the growing consensus is that in the downtown area they are aiming to keep the density to what it is now,” Tony Picon, managing director of Colliers International Myanmar, told OBG. “A height restriction will be imposed on new buildings to preserve the heritage sites and there will be controls on what can be built around heritage sites. They’re getting it right in terms of how they want to define the downtown area.”

While the Dagon episode may have alarmed developers, it has also provided clarity in terms of the government’s stance on protecting heritage sites. Furthermore, the smooth conclusion of the country’s first open national elections in decades combined with the new laws and codes passed in Parliament should provide a much needed framework of regulations and help form a firmer foundation for the future growth of Myanmar’s construction and real estate industries.

Second City Potential

As Myanmar’s biggest and most vibrant city – and home to the vast majority of expatriates who work in the country – Yangon has been the natural focus of the country’s rapid condominium expansion.

However, since 2013, developers have begun to explore the appetite for high-rise living among the residents of Myanmar’s smaller cities. Mandalay, for example, with a population of 1.5m, is a major trading centre for Myanmar with China and India and is the hub of what is a lucrative trade in jade. The first condominium to be built outside Yangon was established in Mandalay in 2013.

The most ambitious project under way in Myanmar’s second city is Mingalar Mandalay, a $140m, 47-acre new township that includes not only condos, but also luxury villas, which are priced from $2.5m. The development is a joint venture between the Mandalay City Development Committee, CAD Construction and New Star Light Construction, and the condominium design has been drawn up by a New York-based architect.

Nearby Khayae Residence, designed by Singapore’s SPC Consultants, secured government approval in July 2015. The 10-storey residential complex will feature a rooftop swimming pool, gym, function hall and car parking. Pegged for completion in October 2016, it will have round-the-clock power and water supplies.

Mandalay’s trading links mean the city’s per capita income is actually higher than Yangon, according to Picon, but that does not mean the residents are necessarily more predisposed towards condominiums. According to Picon, most people in Mandalay have more of an affinity for property with attached land. In fact, U San Linn, chairman of developer Nan Htike Shwe Sin, which is building a 16-story condominium – its first high rise – in the Shan State capital of Taunggyi, told local press that buyers come mostly from Yangon because prices outside the city are more affordable.

People from Yangon are also the buyers for Kris Plaza, the first condominium development in the administrative capital of Naypyidaw, which was carved out of the jungle by the then military government in 2005 and which now has a population of just under 1m. Under the country’s development plans, the new city has been identified as a logistics centre for domestic distribution.

The two-tower, ten-storey complex of 114 apartments including pool, gym, children’s playground and retail complex, is being built by First Myanmar Investment, part of the Serge Pun and Associates group of companies. A company spokesperson told local press that Yangon residents had shown the most interest in the development.

Investment Opportunity

In the case of high-end real estate, including condominiums, many of the purchasers have two or three properties already, U Win Khaing, president of the Myanmar Engineering Society, told OBG. Their interest in property acquisition partly reflects the limited investment opportunities in Myanmar, where few want to deposit money in banks and where there is no stock exchange to buy stocks from. For them, real estate is a safe investment option.

Moreover, as approximately 70% of the population continues to make a living from low-income agriculture, it will be some time before the majority of Myanmar citizens can contemplate buying their own homes. “We are still a least-developed country,” U Win Khaing told OBG. “A lot of people still live below the poverty line.”

The country’s overall GDP per capita was $1127 in 2014, according to data from the IMF, and this is partly why the authorities – and the developers – are keen to allow foreigners the opportunity to buy. Under the existing law, foreigners cannot purchase “immovable assets” and can be jailed, fined, or both, if found guilty of doing so, although some property agents suspect foreigners of buying homes through nominees or fake ID cards.


Although a long time coming, the prospect of a proper legal framework governing condominiums will be of real benefit to the residential property market in Myanmar, providing greater clarity both to those looking to build and those wanting to buy. It will, however, be only a first step. Foreigners will still need to find the funds for their purchases. In a country where bank loans are limited and interest rates high, financing property sales presents a challenge for the average buyer.

In smaller cities, such as Mandalay and Naypyidaw, where rates are cheaper, prospects look good. There is likely to be more interest from those who do business in the city. But the success of condominiums, particularly outside Yangon, will depend ultimately on the old laws of supply and demand, and location, location, location.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Myanmar 2016

Construction & Real Estate chapter from The Report: Myanmar 2016

Previous article from this chapter and report
Ang Wee Gee, CEO, Keppel Land: Interview
Next article from this chapter and report
Housing demand driven up by Myanmar's growing population
Cover of The Report: Myanmar 2016

The Report

This article is from the Construction & Real Estate chapter of The Report: Myanmar 2016. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart