Myanmar: A Colliers International report has forecast growth in the lower to mid tier of the Myanmar serviced apartment sector.
Colliers said rates for most serviced apartments in Yangon are out of the range of most expatriates and this was expected to drive change in the market towards more affordable developments.
In its half-yearly review of the serviced apartments sector in Yangon, Colliers advised developers to target the untapped demand for limited service and mid-tier developments among a large and growing expatriate market that mainly comprises singles and couples.
“Our recommendation reflects likely higher competition as total stock is set to more than double in the span of four to five years,” it said.
The 1,400 low- to mid-tier serviced apartments at the end of the second half this year represented a “meagre” 16 per cent of total supply, Colliers said. Their share of the market had risen in the last two years but was likely to decline because most future stock was geared towards the high-end segment. Of 13 serviced apartment projects in the pipeline, only two were considered to be mid-tier, the review said.
Average occupancy rates for the sector were 91.6 per cent in Q2, up 2.8 per cent on Q1. However, they were expected to fall by 8.3 per cent in the next 12 months, to a forecast 83.3 per cent in the second quarter next year, because of the completion of two developments that would add a total of 486 units to the market, Colliers said. A total of 2,500 units were being planned, it added.
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