Colliers tips industrial sector as star real estate performer in 2018

The industrial sector as a star performer, rising bank confidence in providing mortgage loans and further falls in residential rentals are among Colliers International Myanmar’s top 10 predictions for the Yangon property market in 2018.

Other predictions in a report released this month are office rents remaining competitive amid a decline in new supply and developers focusing more on basic condominiums and apartments, as well as smaller serviced flats and flats for lease.

It quotes Colliers International Myanmar founder and director Mr Tony Picon as saying “speedy reforms and further economic liberalization will be fundamental, eventually driving the real estate sector to new heights”.

The prediction of the industrial sector as a star performer is based on growth in the garment, fast moving consumer goods and logistics industries.

However, the report cautions that infrastructure may remain inadequate in the near to medium term. It said Colliers continually urges industrial developers to focus on improving land development “as well as provisions for generators for redundancy purposes”.

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Protective measures, such as buyer’s legal security under rules released last month for the Condominium Law enacted in February 2016 would entice banks to diversify their housing mortgage programs, said the report, which also predicted that more condominium developers would establish partnerships with banks.

“Colliers suggests that banks should offer more reasonable mortgage terms and partner with lower-tier developments in addition to high-end projects,” the report said.

On residential rentals, it predicted further declines that would “drive capital rates to settle within the high single digit range compared to the 18-20 percent recorded in the past three to four years”.

Predicting that office rents would remain competitive this year because of a decline in new supply, the report said more tenants would upgrade and relocation towards better working spaces would become more evident.

The report said lower-tier but modern apartments and condominiums were likely to witness better sales in 2018. Growth was also likely in smaller-scale serviced apartments and flats built to be leased.

Colliers said entertainment and recreation facilities would become more prominent in big retail developments and it recommended that developers capture a wider consumer base through tenancy mix variation.

It forecast that modern, upper-scale hotels would gain preference over outdated counterparts and allow operators to widen their appeal beyond foreign business and leisure travellers and tap the domestic market for special events.

The report also noted increasing interest in Mandalay, where it recommended that developers design satellite communities that offer an upgrade in living quality.

It also predicted that more developers would head to the Myeik Archipelago and explore opportunities for resort and leisure projects among its hundreds of pristine, undeveloped islands.

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