Myanmar Industry Overview

Multiline retail

Overview

The existing retail centers enjoy high occupancy rates and high retail pedestrian footfall. As of 2015 year-end, Yangon’s retail space is approximately 242,000 sq m consisting of major supermarkets, hypermarkets, department stores and shopping malls. Supermarkets and hypermarkets are the most popular retail property formats in Yangon with highest number of new openings. Local retailers dominate the current Retail Market in Yangon. Many international retailers are entering the local market through partnerships, joint ventures and franchises with local partners who are distributing their products. The majority of retail property still consists of high street, locally owned individual shop units on the ground floor of residential or office buildings. There are some malls, which are currently under construction, or in the pipeline, for completion before 2018. It is estimated that these will double the retail provision within the Yangon region. According to survey data from Nielsen, by 2014 around 33% of monthly household expenditure went toward food and groceries, around 35% went toward semi-necessities and the remaining 32% was spent discretionally. Consumer spending has the potential to increase to over $100bn per year by 2030, which is a triple of the current $35 billions.

Opportunities and Barriers

The retail market is still a fairly undersupplied real estate sector. In 2015, there were an increased number of international retailers moving into the market due to high consumerism and higher disposable income. The major challenge for retail operators is to maintain renting of their shops with high rent when new malls are opening up, resulting a lower visiting rate to their shops. However, there is very little variety among retail centers. Myanmar Plaza, opened in 2016 has an average of $55 per squared meter per month, which is the highest rent in Yangon. Supply wise, there is a considerable amount of retail space planned to become operational within the next few years. The supply for retail market in Myanmar is expected to double by 2018 with over 250,000 sq m of retail space currently in the pipeline.

Legal & Regulatory Framework

As Foreign Investment laws continue to liberalize, there will be diversified retailers and a larger number of operators. This may go some way to counteract the falling occupancy rates and decreasing rents likely to occur as a result of increased stock in the market.

Allowed Types of Investment

Retailing with a floor area of (100’*100*) 10,000 square feet or 929 square meters and above is allowed in the form of joint venture with a citizen owned entity or a Myanmar citizen. For Minimarket and convenience store, Investment businesses foreign investors are not allowed to carry on.

Sources

  1. Myanmar retail & consumer FMCG landscape mapping Master proposal, Ralf Matthaes, Regional Managing Director, TNS Global, 2013
  2. Market Snapshot F&B Retail Market in Myanmar, British Chamber of Commerce, 2016
  3. Trade Restrictions Updated, Luther Law Firm Myanmar, January 2016

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