The correction in prices is mainly due to higher competition. As more modern office space becomes available in Yangon, existing office landlords have lowered their rates by as much as 25 percent this quarter versus the previous quarter, to stay competitive.

“These buildings, which previously commanded premium rentals, have cut rates given the increase in competition,” said Ms Joan Mae Lee, Analyst for Research and Advisory at Colliers International Myanmar.

At this point though, the decline price trends are still“a normal occurrence and merely a correction given the previously low supply base”, Ms Lee said. According to Colliers International, total office inventories reached more than 356,000 sq m as at December 31, 2017.

The new additions to office pool were all located outside the downtown vicinity,such as Pyin Nyein Thu in Myangone township as well as the Golden City Business Centre in Yankin Crystal Tower and The Regency, which are both located in Kamaryut township.

“We expect stocks to continue to build up in the inner city zone, with downtown only likely to witness a considerable increase once Yoma Central is completed in 2021”, Paul Ahlgrim, senior manager for Colliers’ real estate service, said.

The Yoma Central mixed development project will featuretwo Grade A office towers, a business hotel, luxury residences and serviced apartments when complete.

Quality trend

Office builders are now competing based on quality. According to Colliers International, demand for new offices have remained strong despite the sizeable additions to the inventory due to “a continuous flight to quality.’’

Competition is expected to intensify in the near to medium term with the entry of new, developments such as Kantharyar Centre, Time City and M Tower in the coming quarters.

The projects will includeinternational-standard features such ascurtain wall systems, high floor-to- ceiling heights and more spacious lobbies.

Notably, the emerging trend has also forced existing office buildings such as Sule Square and Junction City to maintain consistent standards to stay in the game.

For developers eyeing new office projects in Yangon, “we advise them to be strategic in their early design plans. Building quality matched with a convenient location are key considerations among many tenants, as well as having reasonable lease rates relative to the development’s positioning,” said Ms Lee.

Source: https://www.mmtimes.com/news/rising-competition-forces-office-rentals-down-yangon.html