Myanmar | research reports Mandalay PROPERTY MARKET REPORT H1 2019 Market remains strong for landed properties Summary • Growing demand for luxury gated villa developments • Mixed picture for high rise condominium living • Slow improvement in retail offerings but still in its infancy • Increasing opportunities for Mandalay with Belt & Road Initiative CONDOMINIUM UNITS BY TOWNSHIP IN MANDALAY 2019 Source: Picon-Deed Research / Pho La Min Real Estate Agency POPULATION BY TOWNSHIP 2015 265,779 197,175 241,113 283,781 237,898 Aung Myay Thar Zan Chan Aye Thar Zan Maha Aung Myay Chan Mya Tharzi Pyigyitagon
Transcript
Myanmar | research reports
Mandalay PROPERTY MARKET REPORT H1 2019
Market remains strong for landed properties
Summary • Growing demand for luxury gated villa developments • Mixed picture for high rise condominium living • Slow improvement in retail offerings but still in its infancy • Increasing opportunities for Mandalay with Belt & Road Initiative
CONDOMINIUM UNITS BY TOWNSHIP IN MANDALAY 2019
Source: Picon-Deed Research / Pho La Min Real Estate Agency
POPULATION BY TOWNSHIP 2015
265,779
197,175
241,113
283,781
237,898
Aung Myay Thar Zan
Chan Aye Thar Zan
Maha Aung Myay
Chan Mya Tharzi
Pyigyitagon
Mandalay Property Market Report H1 2019
2
INTRODUCTION TO MANDALAY The city of Mandalay is the main commercial centre for central and upper Myanmar and is also the major city in the Mandalay Region. The city acts as an important transit hub primarily for jade, other gems as well as agricultural products, with strong trade connections with China and to a lesser degree, India. The city had a population of 1,226,000 based on the 2014 census with a significant proportion being of Chinese descent. During the economic sanctions of the 1990s and 2000s the city has forged ever-closer economic ties with China. Mandalay International Airport is the second busiest airport in Myanmar and the city acts as a jumping off point for tourists wishing to travel around the north of the country as well as being a tourism destination in its own right with the main focus being the nearby Mingun zone across the Ayeyarwaddy River. A more central focus is the Mandalay Palace. The palace grounds take up around four square kilometres of city’s centre and is likely to be the main reason that Mandalay has historically not developed a distinct urban downtown. This, along with hilly areas and pagodas to the north and rivers to the west, have meant that the city has expanded more in a southerly direction. Mandalay contains five urban townships that account for the vast majority of economic activity of the city and together form the Mandalay City Development Committee (MCDC). Chan Aye Thar Zan represents the original business district containing the main railway station and Mandalay General Hospital as well as many businesses, mostly occupying traditional shophouses. Aung Myay Thar Zan is the northernmost township of the city and contains the most well-known tourist sites; namely Mandalay Palace and Mandalay Hill. As a result the township hosts a number of upper-scale hotels. Maha Aung Myay is south of Chan Aye Thar Zan and includes significant residential areas and – as a result – is the most densely populated township in the city. The city has expanded south with significant growth taking place in Chan Mya Tharzi Township with its greater availability of larger land plots for development including the old Mandalay airport. Pyigyitagon is the southernmost township of Mandalay City and is less developed and contains the industrial zone of Mandalay.
CONDOMINIUM SECTOR SUPPLY OF CONDOMINIUM UNITS IN MANDALAY
Source: Picon-Deed Research / Pho La Min Real Estate Agency Unlike Yangon, Mandalay does not have a strong association with high-rise living due to the greater abundance of land and better traffic mobility. According to the 2014 census Chan Aye Thar Zan and Aung Myay Thar Zan have 13% and 12% of households living in apartments respectively; other townships have much lower percentages living in apartment buildings. However, over the past decade there has been an interest in condominium development, especially during the jade trade boom to China between 2012 and 2015. This led to a surge in cash flowing through the economy and condominium units provided a means to store the wealth, in similar fashion to Yangon during the same period. The surge in growth of supply in 2019 is due to the expected completion of an affordable housing project in Pyigyitagan CONFIGURATION OF EXISTING UNITS IN MANDALAY
Source: Picon-Deed Research / Pho La Min Real Estate Agency
-
200
400
600
800
1,000
1,200
1,400
1,600
2013 2014 2015 2016 2017 2018 2019 est
Units
Supply at start of year New supply
0 100 200 300 400 500 600
One bedroom
Two bedroom
Three bedroom
Four bedroom
Units
Mandalay Property Market Report H1 2019
3
The Mandalay condominium market is dominated by larger unit sizes in mostly the two- and three-bedroom categories. The units mostly target wealthy buyers who usually look to purchase units with large family sizes in mind. Prices for units range between USD 1,000-2,000 per square metre and sales have been mixed with a number of developments recording strong sales velocities, while others are struggling to find buyers. Those developments with better construction and facilities seem to be performing better. There is a higher propensity for landed property in the city, with more land available and easier mobility courtesy of motorcycles and wider roads than Yangon. Therefore condominiums in Mandalay promote facilities such as gyms and swimming pools along with views that distinguish them from landed housing.
HOUSING SECTOR According to the 2015 census only 7% of households in Mandalay City live in apartments or condominiums, compared with 26% for Yangon’s urban population. Contrastingly, the percentage of households living in brick houses in Mandalay is 16%, compared with 9% in Yangon. Given the better transport infrastructure in Mandalay and greater abundance of land, the development of gated housing developments was only a matter of time. The first project was a gated community within the Mingalar Mandalay mixed-use development.
The popularity of such developments has led to a number of new projects that are either completed or under construction; more than 220 new villa units are expected to be finished by the end of 2020. Patheingyi, to the east of the city, is a popular area for such developments because it provides greater access to larger land plots and more affordable land prices. Most villas have four or more bedrooms and cater mostly to the high-end market. Key landed developments are The One by Myanmar JHI and Nan Oo Lwin by New Star Light Construction. Take
up has been strong for these developments and high quality projects in the future should also be successful.
RETAIL / OFFICE SECTORS The mass retail scene remains limited, with what activity there is taking place in shophouses and traditional markets. However, a number of more modern shopping locations have sprung up in the past five years. The most notable is Mingalar Mandalay in Chan Mya Tharzi, a mixed-use development that includes a pedestrianised shophouse complex and two small shopping centres. Other shopping centres have sprung up but are not popular due to poor design, unattractive tenant mix and lax maintenance; these centres struggle to attract the growing number of foreign brands that are expanding in the city. A new community-style mall opened up in 2018 called Central Point that has a more modern design. As regional and international brands swept into Yangon starting in 2013, Mandalay was not far behind with many setting up due to high spending power. Some shopping centres have benefitted although shophouses are preferred to poorly run malls. Mandalay is also witnessing the growth of modern cinema complexes located in new shopping centres. Rental rates for malls range from less than USD 5 per square metre per month (psqm) in lower quality shopping centres up to around USD 18psqm in prime locations in the more popular malls. A number of office buildings were planned but later abandoned due to a lack of demand. As the main commercial city in the north of the country, Mandalay has its fair share of businesses, but most occupy shophouses or villas that are often owned by the business. The development of an office is usually kickstarted by foreign tenants but at present these are limited in number and scale of operations in Mandalay. During the early development phase in frontier markets almost all office development takes place in the main commercial city. It should be noted that in Thailand there is negligible office space outside Bangkok. However, with a less centralised economy and particular ties with China, the development of some dedicated office space in Mandalay may materialise within the next 10 years, especially if the Belt and Road Initiative (BRI) has a significant economic impact on the city.
Mandalay Property Market Report H1 2019
4
HOTEL SECTOR The growth in tourism in Mandalay from 2012 coincided with a boom in jade and other gem sales to China, with Mandalay being the main commercial hub for this trade. This led to some of the proceeds being steered into the development of mid-range hotels as a way to store wealth and also benefit from the growth in arrivals into the city. Mandalay was on the itinerary for many western tourists and ever-increasing trade links with China meant more businesspeople coming to the city. SUPPLY OF MID-AND UPPER-SCALE HOTELS IN MANDALAY
Source: Picon-Deed Research Hotel supply doubled in the two years from 2012 and continued to grow significantly until the present day with over 5,000 mid- or upper-scale rooms available. However the surge in arrivals was not enough to absorb the number of new rooms supplied and the sector now suffers from a glut of rooms even during the high season. In the past most visitors could only access Mandalay through domestic flights from Yangon. However, over the past few years there has been a growth in direct international flights with most from China and a number direct to Bangkok or Chiang Mai in Thailand. Guangzhou, Kunming, Wuhan, Shenzhen and Tianjin are some of the Chinese cities that can now reach Mandalay. Given the reduction in numbers coming from Europe and North America mostly due to the northern Rakhine situation, China is seen as the number one contributor to visitor numbers to Mandalay with an emphasis on business travel.
PROPORTION OF MID AND UPPER SCALE HOTEL ROOMS IN EACH TOWNSHIP OF MANDALAY
Source: Picon-Deed Research Chan Aye Thar Zan contains nearly half of the mid to upper scale rooms in Mandalay with the township being the main business and entertainment hub of the city. Over 90% of the current hotel supply is located in the three most central townships of Mandalay. During the past few years a number of international hotel brands have entered Mandalay. Best Western branded the Hotel Shwe Pyi Thar before withdrawing. Sedona Hotel was purchased by the Myanma conglomerate Eden Group from Singapore’s Keppel Land in 2016 and then rebranded as Hilton Hotel. The long-established Mandalay Hill Resort by Thai developer LP Holding was rebranded as Mercure Mandalay Hill Resort Hotel. The hotel was previously under Accor Hotel’s Novotel brand until EU sanctions were imposed on Myanmar in 2002. Mandalay Hill MGallery by Sofitel is planned on the plot alongside the Mercure Mandalay Hill. Accor Hotels are expected to further extend their presence in Mandalay in the future with a mixed-use development called Ye Dagun Taung City in Patheingyi Township. A 5-star Novotel Hotel and 3-star Ibis Hotel are planned, and should be constructed within the next four years. The hotel group’s domination of the city’s upper-scale sector will be further extended by the opening of the Pullman hotel at the Mingalar Mandalay mixed-use development.
-
1,000
2,000
3,000
4,000
5,000
6,000
2012 2013 2014 2015 2016 2017 2018 2019
Units
Supply at startvof year New Supply
Aung Myay Thar Zan19%
Chan Mya Tharzi49%
Chan Mya Tharzi9%
Maha Aung Myay23%
Mandalay Property Market Report H1 2019
5
AVERAGE LOCATION RATING BY TOWNSHIP IN MANDALAY
Source: Picon-Deed Research / Agoda The two most popular townships for location ratings are where most tourism, shopping and entertainment destinations can be found. The city is widely spread out with limited public transport so areas outside of the main focal points tend to be less popular.
INDUSTRIAL Mandalay Region is the second most important location for industrial activity in Myanmar behind Yangon Region. Two small industrial zones are located in Myingyan and Meiktila, catering mostly to small local businesses that mostly serve the domestic market. Pyin Oo Lwin also contains some industrial activity focused on its flourishing coffee sector. The most prominent industrial area is Mandalay Industrial Zone, which is located in Pyigyitagon Township and has around 500 factories in operation. Yangon Region’s industrial development has grown significantly since the opening up of the country in 2011; however in Mandalay the situation has stagnated or even reversed over the past few years as the mostly small factories struggle to compete with cheaper imported products, mostly from China. Limited port access has made it difficult to attract export-orientated manufacturers. An industrial park around 58km southwest of Mandalay has been planned for the past seven years. Myotha Industrial Park (MIP) comprises 11,000 acres of land for development. Infrastructure is being constructed and a number of factories have already established there. One of the key features is access to Semeikhon port, which is expected to have adequate draft during the rainy season to dock container barges that can then travel both domestically and to China and India. Whether this development will be attractive to larger scale export-driven manufacturing remains to be seen.
LOGISTICS Currently Mandalay is hampered by poor overland transport infrastructure connecting China. Limited supply chains and almost non-existent cold storage facilities means that there is significant wastage of agricultural produce exported to China and limited value-added benefit from its raw materials. China’s ambitious BRI encompasses neighbour Myanmar and specifically Mandalay through the China-Myanmar Economic Corridor. A recent feasibility study was conducted on a Muse (a border town with China) to Mandalay railway travelling at a maximum of 160km per hour on 431 kilometres of track. One major obstacle is security – the line passes through parts of Shan State where clashes between various armed groups and the Myanmar military sometimes occur. Also planned is an expressway running parallel to the railway and then heading on from Mandalay to Kyaukphyu, a planned deep-sea port in Rakhine State that is a key part of the BRI in Myanmar. With the intended railway terminating at Mandalay, the city could develop as an important transhipment hub as well as a final assembly manufacturing base that would currently benefit from preferential tariff treatment. The reduction in travel times would also increase the flow of Chinese tourists using Mandalay as a travel destination and base for further travels. A dry port is in the process of being constructed at Myitnge in Amarapura Township that is expected to have some bonded warehouse facilities that will enhance Mandalay’s promise as a logistical hub, especially for more efficient distribution of agricultural produce from the north of the country. As with all large infrastructure projects, significant caution is advised but an improvement in the overall infrastructure surrounding Mandalay would create considerable opportunities for future economic growth.
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
Chan Aye Thar Zan Aung Myay Thar Zan Maha Aung Myay Chan Mya Tharzi
Unit 1408, Sakura Tower, 339 Bogyoke Aung San Rd Kyauktada Township, Yangon In cooperation with Pho La Min Myanmar Co., Ltd. Real Estate Agent in Mandalay
