Myanmar’s hotel land prices on the rise
After 50 years under military rule Myanmar is now seeing an influx of foreign investors and tourists that has begun to increase hotel development and demand.
The Bangkok Post reported that in Yangon, Myanmar land plots for hotel development are quickly being auctioned. Helping to push development and foreign investment are the 2012 SEA Games and the Asean Summit 2014 that took place in the country.
The land plots and properties the government selected for bidding in Yangon are in prime locations said Thinn Htutu Thidar, CEO of Myanmar-based Universal Link Co Ltd. The land is owned by the government who in turn leases it for 30, 60 or 90 years to the private sector.
In late January the first phase of bidding began with 25 properties offered. Two were reserved as heritage sites while others were in line for renovation or new construction.
Among all property segments in Yangon, hotels are the most attractive for investors as the supply, particularly four- to five-star, is scarce, said Thidar. She went on to say that foreign investors need to form joint ventures with local companies.
With about 25,000 hotel rooms throughout Myanmar, international chains such as Soitel and Marriott are making plans to move in and rapidly increase unit numbers.
Land prices and value in Yangon are soaring, like in Hong Kong and Singapore, said Thidar. Another interesting sector for investment is industrial estates in economic zones.
Research done by property consultant Colliers International Thailand reported the downtown, inner-city and outer areas of Yangon as having 1,730 upscale hotel rooms. However, cities such as Bangkok have more than triple this amount.
The Post stated that no new hotel rooms have been added in Yangon since 1998, while serviced apartments number just 700 units, unchanged from 2003.
Myanmar-based MK Group of Companies plans to invest in and develop a five-star hotel in Yangon this year and invest in a subsidiary. With a total of 29 subsidiaries and 400 employees, it has expertise in retailing and is a distributor of the Thai consumer product giant Saha Groups ICC International and the Thailand-based retail giant Central Marketing Group. Berli Jucker, owned by Charoen Sirivadhanabhakdi, also has a joint venture with them in Myanmar.
For the past decade, there have been no new hotels in Yangon. Only a handful of the existing ones are four to five star with only five sites, said Paradorn Kunkongkaphan, managing director of the MK Group of Companies.
MK Group has been in Myanmar for 20 years and has experienced high transport costs and currency fluctuations.
Colliers reported that in the retail sector the average occupancy rate of retail space in downtown Yangon, inner-city and out-city areas rose by less than 1 per cent over the past six months.
The business growth rate in Myanmar was around 5-10% a year until 2008. In the past few years, it was in an astounding range of 50% and 100%. We see positive growth and a bright future, said Paradorn.
Yangons office space is, however, still limited. Last year there was 60,000 square metres of space with 17,000 square metres added in 2010. Yangons total office space was only half of what is offered at Bangkoks Empire Tower-a sign that while Myanmars property development is growing there are still leaps and bounds to make.
The definition of condominium in Myanmar is unlike that in Thailand. They call it a condominium if it has an elevator but call a building an apartment if has no lift, said Tony Picon, associate director at Colliers.