Monday, September 25, 2017

Car parking requirements add to continuing woes

The condominium market in Myanmar’s commercial capital remained sluggish in the first quarter of 2017 with lacklustre sales being recorded for most projects, according to the latest report by Colliers International Myanmar.

According to The Htet Oo, research and advisory assistant manager at Colliers International, the number of condominium units launched in the first quarter reached just over 550 – almost equalling the same period in 2016 mostly coming from the Spring Line Residence by Shwe Oak Khai Construction.

“We anticipate future launches and new phases of existing developments may be delayed due to the continued poor sentiment for this sector,” said The Htet Oo.

However, she noted that there was a slight uptick in the cumulative take-up rate to about 54 percent, although this was largely fuelled by demand for The Central by Marga Landmark Development.

“Overall prices remained static in the first quarter of 2017 except for the high-end segment which saw a close to 6pc decline,” the press release stated.

The latest report also noted that the surge in activity in condominium launches a few years ago is bearing fruit with an expected record number of newly supplied units to be become available throughout 2017, an increase of around 30pc from 2016.

As many of these units are expected to be offered for lease for foreigners and repatriates, this should further push condominium rental rates down, according to Joshua Delas Alas, senior analyst at Colliers.

While some limited bank financing options have made minimal impact, the prevailing conditions for future condominium sales remain weak, according to Tony Picon, vice chair of Colliers International.

He added that the continued wait for the notifications and implementation of the Condominium Law which was passed in January 2016 causing uncertainties regarding legal status, especially for foreigners.

However, another major issue is the parking restrictions. The car parking requirements for condominiums in Yangon amounting to 1.2 spaces per unit will “forever severely stunt the sector”, Mr Picon said.

“Smaller unit sizes and less bedroom configurations should be becoming market practice as Myanmar families start to get smaller and many units are for rent to foreigners looking for small one bedroom units; but the existing parking requirement makes this much harder to be achievable so mostly an oversupply of large three bedroom units will remain the norm,” he warned.

In terms of affordability, large units mean higher prices and many local buyers are being priced out of the market in all segments.

“In other countries, new buyers can put their first foot on the property ladder with a 30-40 square metre unit but in Yangon this is virtually impossible,” pointed out Mr Delas Alas.

The continuing woes for the sector provide positive news for developers of single-owned apartments for lease or serviced apartments, which do not have car parking requirements based on number of units.

Elsewhere, small condos for rent are an attractive option for foreign renters, but in Yangon they present limited competition for serviced apartments catering for expatriates looking for small size but good quality accommodation, The Htet Oo explained.