YOUR PROFESSIONAL PROPERTY ADVISOR IN MYANMAR. Yangon s F&B market A real estate perspective March 2017

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1 Yangon s F&B market A real estate perspective March 2017

2 Yangon s retail market Overview Success story of Myanmar real estate market Limited amount of stock Growing number of foreign brands interested in entering the market High occupancy rates Buoyant rental levels

3 Millions of sq ft (GLA) Yangon s retail market Supply Supply currently severely outweighed by demand However retail space is increasing quickly Supply increased by c.14% in 2016 up to almost 2.7 million sq ft Gross Leasable Area (GLA) Approximately 1.4 million sq ft of new space due to complete in 2017 More than 50% increase year-on-year Retail supply, sq ft (GLA) (Forecast)

4 Yangon s retail market Demand Demand increasing has seen entry of many foreign brands via franchises:

5 Yangon s retail market Occupancy rate Extremely high occupancy rates of over 90% in all prime, 2 nd tier and even tertiary schemes Junction City Due to complete end of March 2017 Already reporting c.100% pre-letting levels in its mall HAGL Myanmar Plaza Phase 1 mall has very high occupancy levels Developer set to add further retail to Phase 2 in 2017/18

6 USD per sq ft Yangon s retail market rental levels Average retail rent = c.$2.9 per sq ft per month Top developments e.g. Myanmar Plaza have achieved rents as high as $5 per sq ft per month Even higher rents for certain key F&B units Junction City quoting $5 - $10 per sq ft but average rent is $5 per sq ft per month Retail on the brink of rising above office rental levels Average rental rate per sq ft (Forecast)

7 Yangon s retail market Key locations Downtown Midtown Uptown Outer City Source: Google Maps, SPS

8 Yangon s retail market Key downtown malls Photo Name Size (GLA) Description Developer Junction Maw Tin 85,000 sq ft Retail podium, including gym and cinema, under 2 residential towers. Opened in 2010 Mostly local tenants. Shwe Taung Group Sule Square 64,583 sq ft Attached to the famous Sule Shangri-la Hotel (formerly Traders Hotel ). Mostly office space, with a few floors of luxury retail. Shangri-La Hotels

9 Yangon s retail market Key midtown malls Photo Name Size (GLA) Description Developer Myanmar Plaza 347,168 sq ft 22-storey Grade-A office tower, 5-storey retail podium including shops, fashion, F&B outlets, anchor supermarket. HAGL Myanmar Junction Square 183,000 sq ft Opened in March 2012, including 270 shops, a Citymart supermarket and 3 cinema screen. Currently being expanded. Shwe Taung Group

10 Yangon s retail market Key upcoming malls Photo Name Size (GLA) Description Size (GLA) Junction City (opening March 2017) 93,244 sq ft New high quality development including retail podium, office tower and Pan Pacific hotel. Shwe Taung Group and Keppel Land Time City (expected to be opened in 2017) 96,718 sq ft 5 storey retail podium with 850 shops, plus office tower. Crown Advanced Construction Co., Ltd. Kanthayar (opening 2017) 56,000 sq ft Retail podium to service 5* hotel, grade A office tower, serviced apartments and luxury condominiums above. Asia Myanmar Shining Star Co., Ltd. (AMSS)

11 Yangon s retail market Future outlook Retail likely to continue to perform well over the next few years Supply will increase But more foreign brands will enter the market Growing consumer class

12 F&B in Yangon Fast food brands

13 F&B in Yangon Other popular brands

14 Operating Conditions Retail mall F&B units Positives Facilities in-built, e.g. exhaust ducts Sufficient power and water Garbage disposal / collection systems Footfall traffic Better open-plan space Monthly/quarterly rental payments No issues with neighbours Parking provision Negatives Lacking character Higher rents Not many malls Not many available units Very few malls allow sale of alcohol

15 Operating Conditions Stand-alone units Positives More character heritage buildings Lower rental levels More choice re: location Negatives Potential for difficult neighbours permissions needed Rent usually required 1 year upfront No liquor licenses for units near pagodas, monasteries or schools Power issues Lack of water supply Communal back of buildings can often be unsanitary May need to install kitchens and bathrooms No footfall Limited parking

16 Operating Conditions External factors Very few cold storage premises/companies currently operating Difficult regulatory environment interpretation can vary from township to township Operating Conditions Capex If rent required 1 year upfront, can represent 30-40% of capex Liquor Licenses: $7,000 - $10,000 plus annual renewal fee Will need to import kitchen equipment Furniture is expensive and poor quality Fit out and licensing costs = c.$80-$100 per sq ft for a good quality restaurant/bar

17 About Slade Property Services Founded in 2013 by Hugo Slade, a British Chartered Surveyor Registered with and regulated by the Royal Institution of Chartered Surveyors (RICS), guaranteeing the highest ethical and professional standards The only company in Myanmar with two employees who are fully qualified members of the RICS and RICS Registered Valuers Our services include: Market Research Valuation & advisory Development consultancy Sales, marketing and leasing, on behalf of both landlords and tenants/purchasers Investment and joint venture advisory Property and facilities management We specialise in: Residential Office Retail Industrial Development land Hospitality (hotels and F&B) Education

18 For more information, please contact: Hugo Slade, BSc (Hons) MRICS Managing Director Phone: +95 (0) Mobile: +95 (0) hugo.slade@sps-myanmar.com Verity Ramsden, BA (Hons) MSc MRICS Associate Director Valuation & Advisory Phone: +95 (0) Mobile: +95 (0) verity.ramsden@sps-myanmar.com Address: Unit #1-05A MWEA Tower 288/290 Shwedagon Pagoda Road Dagon Township Yangon Myanmar Website:

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