Wai Linn Kyaw/MBT
Yangon’s office space is predicted to more than double last year’s total, reaching over 240,000 square metres by the end of 2015, more than double last year’s total area of 107,864 square metres, according to a report from American real estate services organisation Colliers International.
According to the report, 2015 will see the fastest growth in office space, and the rate of growth will decrease more than twofold in 2016.
In the past year, rental prices have decreased on average, but this was uneven across Yangon. Rental prices decreased in downtown and the outer city, but increased slightly in the inner city.
Offices in the outer city have seen occupancy rates above 90 percent since 2012, while those downtown remain the most vacant, hovering between 70 and 80 percent, the report said.
As Yangon gains more office space, the city’s centre of business and commerce is also moving uptown and into the outer city. The rent in these areas is lower than downtown, although the gap has been closing since 2012.
Despite this growth, Yangon’s office space remains far behind other cities in Southeast Asia, and the quality of office space is often much lower. Because of this lack of space, many organisations have resorted to converting residential flats or houses into office space.
“Because of the new high quality offices, they old offices will have a low priority in the market, so the rent for these is bound to go down. Some owners are trying to refurbish their offices to compete in the new market.” U Nyi Nyi Zaw, owner of Gold Asia Real Estate Company, told Myanmar Business Today.
According to the report: “At present, there is only 59,000sqm of top-tier office buildings in the city. Besides the newly completed better quality developments in Q2 2015 along with the existing buildings (Sakura Tower, Union Business Centre, FMI Centre and Center Point Tower), eight new higher-grade projects are currently in the pipeline, representing approximately 236,500sqm of office space.”
“A flight to newer quality buildings should continue over the next several years as existing and future tenants are in search of proper office spaces coupled with the increasing availability in medium term,” the report said.