Crowning through the COVID-19 Crisis

The Pandemic's Implication to the Myanmar Property Market: Special Coverage


COVID-19 has heavily impacted the global economy. Tourism sector is the first one to be hit by the epidemic, with travel bans put up by nations to other infected areas, in hopes of preventing the virus to spread or enter countries. In Myanmar, private companies are adopting preventive measures to ensure the safety of the people while the effects in the economy, as well as the social environment, are slowly coming to surface.

 

Same way as other countries, tourism sector was the first to be affected. This is to be expected from a nation with huge Chinese tourist market. Last year’s number suggests that more than 40% of the total airport arrivals are from China. Although this is the case, it is noticeable that there are fewer tourists across all nationalities, at least in Yangon. The main reason is access to Myanmar. Direct flights to Myanmar are quite minimal. Tourists reach Myanmar through connecting flights via Bangkok, Singapore, and several cities in China. Unfortunately, the main ports of embarkation have high cases of infection, aggravating the tourism conditions even further. Some hoteliers are expecting high cancellation rate projecting to lose significant amount of revenue for the year. However, there are few hotels that remain optimistic, citing opportunities amidst the situation. 

 

According to recent news, global supply chain is slowing down due to indefinite temporary shutdown of factories, quarantined workers, and travel bans. Myanmar will be no stranger to this, considering that majority of the imported raw materials is from China. As a matter of fact, several companies, mostly from garment manufacturing, have announced a possibility of halting operations, while more are expecting to close down in a few months’ time if the operations in China does not resume to its regular operations or they cannot source for other suppliers. Several businesses especially with large manpower (i.e. telecommunication, FMCG, media press industry) have started implementing work-from-home setup and we expect more to follow suit moving forward. Observably, the nature of these businesses is quite adaptable to the concept. The challenge lies on certain companies with strong interdependence between its supporting back office and operating fields. 

 

The effects to the economy are similar to the SARS outbreak back in 2002. The difference now is that, global supply chain is more dynamic, people are more mobile, and adding fuel to fire – social media. Being the main channel of information nowadays, people get updates quickly but at times makes them irrationally or overly anxious due to disinformation. But still, the effects should be temporary as how several economies bounced back after SARS subside. However, this is in view that the vaccine would be discovered sooner than later and, more importantly, regaining public and business confidence. Opportunities lies in each and every situation, we believe the situation can be maneuvered in a way that the effects can be tempered down or take advantage of: 

 

CAPITAL MARKET

 

• This situation should emphasize the importance of vertical integration in industrial developments for economical and continuous production. This should exert pressure for the country to produce international quality industrial parks and supporting infrastructure that will be ready to accommodate the needs of industrial occupiers.

 

• Some rental properties have started giving incentives in the form of rental reliefs to its tenants or occupiers. We advise other operators to apply the same to retain business interests in its premise.

 

• Improve security and health protocols as establishments are places for gathering.

 

• This is a good time for offices to do refurbishments considering the implementation of work-from-home from various businesses.

 

• While some companies are taking internal meetings once a week for catch-up, office operators can explore on flexible working space concept to support businesses.

 

• Hoteliers may consider to partially operate or to not offer all rooms to save on operating costs. Moreover, we advise hospitality sector to shift its attention to local market as local tourists would rather travel domestically this year in light of the virus.

 

• Some ongoing developments may stall construction. This is a chance for completed developments to sell its remaining inventories by creating amenable payment schemes on unsold units to rejuvenate sales activities.

 

• Investors to continue with their due diligence while waiting for recovery; it is opportune time to do in-depth reviews of portfolios

and look out for opportunities in the selling block.

 

OCCUPIERS MARKET

 

• This may be the time for retail businesses to explore retail platforms

 

• Occupiers should seek for better deals or renegotiate contract in light of the business climate

 

• Manufacturers should start looking for other potential areas for satellite factories of smaller production capacity at the very least, as

contingency in case of similar scenarios 

 

The demand in the property market are slowing down but would eventually run again on its course once everything moderates. Anticipating downturns and revisiting strategies should counter the effects to some extent. Executing befitting solutions when recovery starts should be of top priority as well. The global situation is not entirely unprecedented to us, although the gravity of the circumstances is of greater degree, overtime this will pass.


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Joshua DeLasAlas | Colliers International | Yangon

Joshua DeLasAlas

Senior Manager

Yangon

Joshua De Las Alas has more than five years of experience in real estate advisory and research, most of which are spent in Myanmar. Currently the Senior Manager for Advisory Services, he is mainly handling various advisory and consultancy requirements such as market studies, feasibility studies, highest and best use studies, site assessment studies.

Based on the market and industry knowledge he gained in Myanmar and overseas, he specializes in over-all development planning, design conceptualization and theme recommendation, and financial simulation and forecasting to determine the feasibility of each project.

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