Primer Research Report
Mandalay | Property Market
2015
Accelerating success.
Highway to Mandalay
The city rises as a property investment
destination
The famous poem by Rudyard Kipling immortalized the city,
making the name Mandalay more recognisable than the place
itself. That situation is now slowly being addressed since
Myanmar started the reform process in 2011.
Mandalay, the second largest city and the last royal capital of
Myanmar, is regarded as the main commercial and economic
hub in the northern region as well as a tourist destination.
The city was founded in 1857 and eventually annexed by the
British in 1886. In the 1990’s, the influx of Chinese from the
Yunan province has led to the city’s demographic diversification.
Consequently, the strong presence of businessmen have
contributed to the current economic robustness of the region.
It serves as the main trading centre with China for the lucrative
jade and other precious stones business which has, to some
degree, allowed Mandalay to fair better during the sanctions of
the last decade than the main commercial centre of Yangon.
Now an emerging metropolis backed with a relatively wealthy
population, Mandalay is beginning to attract both local and
foreign investments. It is likely to play an important role as
the main secondary commercial city in the country with its
distinctive character and economy.
The lack of international quality developments amid strong
demand prospects suggests that the real estate market in
Mandalay is in a nascent stage, geared for expansion.
Mandalay
Yangon
Mandalay is located 716 km north of Yangon and covers an area
of 164 sq km. Based on the 2014 Census, the city has a population
of 1.225 million. It comprises of seven townships – Aung Myay Tha
Zan, Chan Aye Tha Zan, Maha Aung Myay, Chan Mya Tha Zi, Pyi
Gyi Ta Gon Amarapura and Pathein Gyi.
Mandalay property zones defined
easier with well delineated townships
Colliers International has zoned Mandalay City by grouping the
townships into larger geographical clusters.
»» The Inner City Zone comprises three townships and represents
the main area for commercial expansion of the city. Situated
to the north is Aung Mye Thar Zan, being home to Mandalay
Palace, the amount of development is restricted. Nonetheless,
retail shops and boutique hotels are largely present elsewhere
in the general zone. Real estate development has grown further
towards the south of Downtown. The southern part of the Inner
City Zone, composed of Mahar Aung Mye and Chan Mya Thar
Si townships, witnessed increasing number of landed residences
and commercial establishments over the past years. Moreover,
the first mixed-use development in Mandalay, set to complete in
the near term, belongs to the Inner City Zone.
»» The property and economic landscape in the Outer City
Zone remains geared towards mostly industrial and agricultural
activities. However, the eventual completion of the Asian
Highway, along with vast availability of land plots; are of key
interest to some investors keen to develop master-planned
communities. The Outer City Zone contains Amarapura, Pyi Gyi
Ta Gon and Pathein Gyi townships.
At present, there is limited modern real estate development that
clearly defines Mandalay’s key city zones. This is most likely to
change as the city further develops.
High-rises limited in the whole of
Mandalay
Percentage of Households Living in Apartments
and Condominiums by City
Downtown
Chan Aye Thar Zan
Inner City
Aung Mye Thar Zan
Mahar Aung Mye
Chan Mya Thar Si
Outer City
Amarapura
Pyigyitagon
Pathein Gyi
Source: Colliers International Myanmar
Unlike Yangon, Mandalay’s central townships are well delineated
with a block grid city layout. With common distinct features, the
townships are further clustered into three major development
zones:
»» Chan Aye Thar Zan, classified as Downtown, is considered
as the city’s primary business district. The township’s
robust commercial and economic activity is reflected by the
large presence of hotels, retail centres, and institutional
establishments. The majority of Mandalay’s property
developments and businesses are presently concentrated in
Downtown.
2
Source: 2014 Myanmar Population and Housing Census, UNFPA;
Colliers International Myanmar
Mandalay compares to other secondary cities in terms of
proportion of households living in high-rise properties rather
than landed housing. Yangon’s greater density together with
the government policy to house civil servants in apartments in
Naypyitaw, largely account for the higher numbers for largest
commercial city as well as the capital, respectively.
Primer Research Report | 2015 | Mandalay | Property Market
Condominiums are almost inexistent;
landed residences remain preferred
Supply Stock - Notable Condominium
Developments
The sales take-up for condominiums is modest, which ended
at 53% in the first half of the year. Overall, private villas are the
preferred residences given the vast availability of developable
land and probably due to the reluctance to embrace the
residential condominium concept. This occurrence is prevalent
in the early stages of real estate development in Southeast Asia
where high rises are perceived as affordable housing rather than
a lifestyle choice. With the increasing popularity of integrated
communities, gated residential villas reinforced with retail and
other supporting components, are seen to be of high demand
going forward. This is evident with the strong take-up rate
witnessed in Mingalar Mandalay and Mann Akarit mixed-use
projects.
Still a lack of modern retail facilities;
more is required
Yangon Vs. Mandalay Retail Stock
Source: Colliers International Myanmar
The supply of notable condominiums in Mandalay is meagre,
being solely represented by Mann Myanmar with 300 units.
Completed in 2013, the development is the first notable
condominium introduced in the market. While there were no
new projects delivered since then, business interest in property
investments are now beginning to surface. Over the past year,
three new projects were launched, leading the stock to more
than double by 2017, if completed on time. One of these projects
includes Mingalar Mandalay Condominium in the Inner City
Zone. Forming part of a 46-acre mixed-use development, the
12-storey two-tower condominium project is set to complete
in a three-year span. Meanwhile, the rest of the condominium
projects will rise as stand-alone developments.
Source: Colliers International Myanmar
Mandalay’s retail space lags far behind Yangon. At present, the
city offers only two shopping malls, namely Diamond Plaza and
Ocean Super Centre. The latter, located in Mingalar Mandalay,
is the most recently completed retail facility in the market. Both
malls represent 25,700 sq m of leasable space. Meanwhile,
shopping malls in the Outer City Zone are non-existent and
department stores in the whole city is very limited.
The condominium design parameters in Mandalay are
comparable to Yangon’s: the unit mix tends to favour the two
to three-bedroom categories - representing close to 90% of the
market; while the average unit sizes of most bedroom types
are almost the same in both cities. Buyers tend to be in large
extended families that require many bedrooms, while the
foreign rental market, with demand for smaller units, is still in
its infancy. In contrast, the average selling price is set relatively
low in Mandalay, at a discount of approximately 30 to 50% to
comparable condominium projects in Yangon.
3
Despite the introduction of Ocean Supercentre, the city still
lacks modern retail facilities. On the other hand, small-scale
retail strips and shop houses continue to dominate the market.
These local retail centres are considered poor in quality with the
majority being seen in main thoroughfares such as along 73rd
street in the Inner City Zone.
Primer Research Report | 2015 | Mandalay | Property Market
Tourist arrivals to keep up with
surging hotel supply
With the country opening up, backed by political and economic
reforms, the tourism and business interest in Mandalay have
likewise strengthened over the recent years. The number of
foreign arrivals reached more than 240,000 in 2014, a substantial
increase of over 50% since 2012. With a tourism road map now
being developed, coupled with the growing business interest in
Mandalay and more airlift, the number is anticipated to further
increase. However, despite the upward trend, the sudden rise
in local hotel developments, could potentially outweigh the
current demand, posing greater challenges for new hotel market
entrants.
Foreign Arrivals in Mandalay
As at the end of H1 2015, the city-wide shopping mall occupancy
rate was at 81%. Though Ocean Supercentre reached fullyoccupied level, the substantial vacant spaces in Diamond Plaza
drove the overall rate down. Meanwhile, the average rental rate
is almost on a par to Yangon at USD 20 per sq m monthly.
Source: Ministry of Hotel and Tourism, Mandalay
Data from the Ministry of Hotel and Tourism reveals that as at
the end of 2014, there were 134 registered hotels in Mandalay,
representing 5,933 keys in total. The number grew dramatically
by 77% since 2011. The substantial increase in supply was mostly
driven by the surge in local small-scale hotels in the past years
comprising a large majority of the market.
Given Mandalay’s increasing urbanization coupled with the
market’s high purchasing capacity, an expansion in retail
footprint should come as a welcome opportunity to many
developers. At present, the city’s total retail space versus the
population is still considered low at 0.03 square metre per capita,
despite being higher than Yangon’s 0.02. Nevertheless, smaller
retail centres could be successful in Mandalay than Yangon due
to easier traffic conditions and the widespread use of motorbikes
allowing far greater mobility.
In the long term, the demand for traditional retail spaces
and shop houses is seen to be relatively strong. However, the
introduction of quality shopping destinations will change the
course of the market’s buying patterns, eventually driving further
growth in the sector.
4
Primer Research Report | 2015 | Mandalay | Property Market
Supply Stock - Upper-scale Hotel
Developments
Commercial office market is
untapped despite signs of growing
demand
Given the small presence of foreign companies in Mandalay, the
demand for office space is characterized as domestically driven.
As a result, many developers lack the incentive to construct
proper office spaces which in fact is currently inexistent in the
city.
Source: Ministry of Hotel and Tourism, Mandalay
On the other hand, the presence of upper-scale hotels remains
thin. Completed in 1996, Mandalay Hill Resort was the first
high-end hotel introduced. This was followed by Sedona Hotel
the succeeding year with 247 keys. To date, the number of
upper-scale hotels has grown to five with the addition of Rupar
Mandalar Resort in 2005, Red Canal hotel in 2007 and Best
Western Premier’s Hotel Shwe Pyi Thar in 2012. Five new projects
are currently under way including branded hotels Pullman by
the Accor Group and Hilton; a 30-storey new hotel along 84th
street in the Inner City Zone, and a 160-room hotel named the
Prome Mandalay.
Local offices come in retail units, shop houses or apartments,
being largely present in both Downtown and the Inner City
zones. The commercial demand for such office requirements
seem high with many of these facilities being fully occupied. For
instance, Shwe Phyu Plaza, initially constructed as a department
store, is now fully leased out as an office space. The same has
been observed among shop houses being utilized for both office
and retail operations simultaneously. These alternative offices,
considered low in quality and lacking proper utilities, charge
rental rates between USD 8 and USD 24 per sq m per month.
Meanwhile, some international firms have established a
footprint with offices based mostly in hotels. Hotel landlords
dictate as high as USD 60 per sq m per month for the use of these
commercial spaces.
As in many secondary cities in South East Asia the preference
is for businesses to use such alternatives and it takes time for
dedicated offices to play their part unlike in main commercial
centres.
In the near term, Mandalay is expected to have its first dedicated
commercial office building to be located in the mixed-use
development Mingalar Mandalay.
5
Primer Research Report | 2015 | Mandalay | Property Market
502 offices in
67 countries on
6 continents
United States: 140
Canada: 31
Latin America: 24
Asia: 39
ANZ: 160
$2.3
16,300
billion in
annual revenue
1.70
billion square feet
under management
EMEA: professionals
and staff
108
Adrian Soe Myint
Analyst
Research & Advisory
+95 (0) 943190707
Karlo Pobre
Manager
Research & Advisory
+95 (0) 9 795 733 378
karlo.pobre@colliers.com
Tony Picon
Managing Director | Myanmar
+95 (0) 942 103 4026
antony.picon@colliers.com
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its
accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors
prior to acting on any of the material contained in this report.
Colliers International
Myanmar
Room No. B 803, 8/F.,
Tower B,
Myawaddy Bank Luxury
Complex, No. 151, War Dan
Street, corner of Bogyoke
Aung San Road,
Lanmadaw Township,
Yangon, Myanmar
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