Naypyitaw Property Report 2019

Myanmar | research reports
Nay Pyi Taw
PROPERTY MARKET REPORT SEPTEMBER 2019
Matching realistic growth with grand ambition
Summary
• Internationally managed hotels surviving from supply glut
• International school opens new campus in preparation for embassy relocation
• Retail malls flourishing
• Poorly managed hotels struggle with significant vacancies
INTRODUCTION
There are signs of new growth in Nay Pyi Taw,
Myanmar’s administrative capital. The city, which is
located approximately halfway between the city’s two
most populous cities – Yangon and Mandalay – has
been the seat of Myanmar’s government since 2006
and is one of a growing number of the world’s
planned, administrative cities.
The list includes Washington (United States), Canberra
(Australia), Brasilia (Brazil) Nur-Sultan (Kazakhstan) and
Abuja (Nigeria). But it will not be the last: Indonesia
recently announced that it will relocate the government
from notoriously traffic-choked and waterlogged
Jakarta to East Kalimantan, a province on the island of
Borneo.
A small number of diplomatic missions have already
signalled their intent to establish a greater presence in
Nay Pyi Taw by announcing the opening of liaison
offices in the capital, a move that will eventually lead to
a shift their embassies to the capital.
Faster to move have been companies, especially those
that work in the business-to-government sphere, a
growing number of which have already set up a
physical presence in Nay Pyi Taw. Multilateral
organisations such as the United Nations, that work
closely with the government, have already set up a
base in Nay Pyi Taw and will likely grow further in
future.
Nay Pyi Taw already has a broad range of
accommodation options available and the opening of a
new international school makes the city appear better
equipped than ever before to become a family
destination for expatriates.

Nay Pyi Taw Property Market Report September 2019
However, one sticking point that seems no closer to
resolution is the availability of international healthcare
facilities: as yet none of the international providers
have announced plans to open even a clinic in Nay Pyi
Taw. The need to develop the capital as a viable
international city is still challenging on a financial level.
NAY PYI TAW TOWNSHIPS
PROPORTION OF POPULATION AS GOVERNMENT
EMPLOYEES
40%
35%
30%
25%
20%
15%
10%
5%
0%
Dekkhina
Thiri
Lewe Tatkon Pyinmana Ottara Thiri Pobba Thiri Zayar Thiri Zabu Thiri
Source: Picon-Deed Research
Nay Pyi Taw has been designated a Union Territory
directing administered by the president. The small
town of Pyinmana existed before the relocation but
most of the capital’s near one million inhabitants
arrived after 2005. The city is divided into a number of
townships that generally do not have a significant
bearing on the zonal nature of the planned city.
POPULATION DENSITY OF SECONDARY CITY
CAPITALS
Population per sq km
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
-
Nay Pyi Taw Ottawa Brasilia Canberra Nursultan Abuja
As the administrative capital of the country Nay Pyi
Taw contains a significant proportion of government
employees. Zabu Thiri Township hosts the largest
proportion of government employees in relation to
overall population because accommodation was
designated specifically for government employees
there, including colour-coded roofs based on job
designation. Zabu Thiri is also the location of many
government functions such as various ministries.
Zaya Thiri Township records the second-highest
proportion of government staff to general population,
courtesy of the large numbers of military personnel
posted there.
NAY PYI TAW ZONING
NAY PYI TAW ZONES
Source: Picon-Deed Research
Many countries all over the world have located their
capitals to secondary cities instead of the main
commercial city. Often such new capitals are designed
from scratch with an emphasis on low density living.
Even compared to other such capitals Nay Pyi Taw has
a far lower population density due to its significant land
size, which is evident to anyone driving around the city.
This creates a feeling of isolation and lack of vibrancy
throughout the city that will take some time to
alleviate.
The existing township structure only goes some way to
explaining the overall structure of the city. The initial
planning of Nay Pyi Taw was based on distinctive
geographical zoning for particular functions: hotels,
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Nay Pyi Taw Property Market Report September 2019
government ministries, military uses and diplomatic
missions.
INFRASTRUCURE AND FACILITIES
As a planned city, Nay Pyi Taw is becoming well
equipped in terms of its infrastructure and facilities,
with one key omission: international-grade healthcare
facilities. There is a range of government-run and
private healthcare facilities in Nay Pyi Taw to handle
nearly any emergency, but medevac insurance would
be mandatory for any international staff based in the
city.
Otherwise the city has multiple leisure options that
include parks, retail malls, cinemas, sporting facilities,
bike trails and plenty of swimming pools, located in
many of the hotels. Given the sparse traffic, it is also
easy to explore the surrounding areas.
Road transport
Nay Pyi Taw is a city linked only by road – there is no
dedicated metro line. Many of the expatriates who call
Nay Pyi Taw home have arranged their own transport –
either by buying or renting a motorcycle or car.
Arranging personal transport within Nay Pyi Taw is
listed as important by long-term residents to ensure
they have the freedom to buy groceries, visit
restaurants, attend after work events, travel during
weekends and make social appointments.
There is also a public bus network within Nay Pyi Taw
with routes geared to service the needs of the civil
servants. There are regular day and night buses
between Nay Pyi Taw and both Yangon and Mandalay.
It takes about five or six hours to get from Yangon to
Nay Pyi Taw, with buses stopping at either of the city’s
two main bus stations: Thapyegone and Myoma Zay,
which are in close proximity.
Air transport
Rail transport
It is entirely possible to ride the train from Yangon
Central Station to Nay Pyi Taw but it can take up to
nine hours. Passengers can elect to alight at either
Pyinmana or at the huge and underutilised Nay Pyi Taw
station.
Education
Nay Pyi Taw has three international schools at present
ranging from modest student numbers up to mid-size
facilities that house hundreds of school students –
enough to create mini traffic jams during pickup and
drop off times.
Sports and events
Nay Pyi Taw hosted the 2013 Southeast Asian (SEA)
Games and contains an impressive array of sporting
venues.
The city also has an enormous conference hall:
Myanmar International Convention Centre 2, that is
capable of hosting thousands of visitors.
HOTEL SECTOR
Apart from government buildings, the main focus of
real estate in Nay Pyi Taw is the provision of hotel
rooms. In general the government mandated a wide
range of developers and other businesses to construct
and manage hotels shortly after the announcement of
the new capital in 2006, likely in exchange for trading
and mining concessions in other parts of the country.
The purpose was to host events planned for the capital
culminating in the SEA Games in 2013 and the
chairmanship of ASEAN in 2014.
HISTORICAL SUPPLY OF HOTEL ROOMS
Nay Pyi Taw International Airport is a large airport
located about 10 miles (16km) to the southeast of the
city. The airport is capable of handling up to 3.5 million
travellers a year.
The airport has daily flights from Yangon and Mandalay
domestically, as well as direct flights to Bangkok,
Shenzhen and Kunming on China Eastern Airlines. The
limited number of international destinations served is
also an impediment for expats wishing to locate in the
capital.
Number of rooms
5,900
4,900
3,900
2,900
1,900
900
-100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Supply at start of year
New supply
Source: Picon-Deed Research
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Nay Pyi Taw Property Market Report September 2019
The surge in hotel rooms took place during the first
half of the 2010s with the initial focus on the southern
hotel zone where the lion’s share are rooms are still
located. The construction boom came to a halt in 2014
upon completion of most of the planned hotels.
PROPORTION OF HOTEL ROOMS PER SECTOR
Western
3%
National
Guesthouse
18%
PROPORTION OF HOTEL ROOMS BY CATEGORY
Upper-Scale
29%
Mid-Scale
36%
Economy
35%
Southern
64%
Northern
12%
Pyinmana/Zabu
Thiri
3%
Source: Picon-Deed Research
The grading of hotel rooms is based on a number of
factors such as room size and design, facilities and
reviews. In Nay Pyi Taw there is an even balance
between the three categories catering to different
requirements and budgets.
National Guesthouse Northern Pyinmana/Zabu Thiri Southern Western
Source: Picon-Deed Research
The first batch of hotels was locally managed and
varies widely to this day in terms of facilities, quality
and service delivery. The National Guesthouse Zone
(also defined as the International Zone) was developed
a year or two later with locally owned hotels managed
by upper-scale international brands to provide a better
and more consistent level of service. These hotels are
the main focus for attendees of the international
conferences such as the Euromoney Global Investment
Forum, with the hotels in the other zones handling the
spillover.
Many dignitaries and executives visit the capital and
will usually stay in upper-scale hotels, especially in the
National Guesthouse Zone. Lower grade hotels cater
to businesspeople visiting the capital and a small but
growing number of tourists, especially from China, who
travel on tour buses.
The Southern Zone contains most hotel rooms,
stretched thinly along Yaza Thinghaha road. Some are
within walking distance of two malls in the city. The
Northern Zone hotels are quite isolated, even by Nay
Pyi Taw standards.
Hotels are often fully booked during the twice-yearly
Gem Emporiums when gem and jade buyers descend
on Nay Pyi Taw to buy lots at auction. It is estimated
that around 4,500 visitors visit Nay Pyi Taw for this
event thus filling many of the hotels. Other large-scale
events can fill up many of the hotels especially in the
National Guesthouse Zone but otherwise the abundant
supply of rooms far outnumbers the trickle of guests
staying in the capital.
As a result of the significant mismatch between
demand and supply a number of hotels have chosen to
close down operations except for the occasional highdemand
periods such as the Gem Emporium.
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Nay Pyi Taw Property Market Report September 2019
RESIDENTIAL SECTOR
RETAIL SECTOR
PROPORTION OF HOUSEHOLDS LIVING IN
APARTMENTS
Zabu Thiri
Zayar Thiri
Pobba Thiri
Ottara Thiri
Pyinmana
Tatkon
Dekkhina Thiri
Lewe
0% 10% 20% 30% 40% 50% 60% 70%
Source: Picon-Deed Research / 2014 Population and Housing
Census
Due to the building of apartments specifically for
government employees when the capital moved from
Yangon, the township of Zayar Thiri – and to a lesser
extent Pobba Thiri – contains a significant number of
apartments. Otherwise, landed property dominates the
housing market.
Despite the overall size of Nay Pyi Taw, the proportion
of housing that meets expatriate needs is limited,
although there is a neighbourhood in Ottara Thiri
Township that has found favour with expatriates. In
general the quality of such residences does not match
international standards with often poor interior
finishing and limited maintenance by the landlords.
Instead, most expats make long-term agreements with
the hotels to lease suites or bungalows, which are
mildly refitted with kitchen appliances, additional
bench space and kitchen sinks. Currently most expats
living in Nay Pyi Taw are single so smaller one
bedroom or studio units are acceptable if not ideal,
with only limited facilities for long-stay guests.
Many hotels have an unusual spread of different room
types, with too many large-size suites than would
normally be considered ideal. However, these larger
rooms lend themselves to conversion to long-stay
arrangements, with the normal facilities of resort-style
hotels: swimming pools, tennis courts and gyms being
further draws. Currently most conversions have been
undertaken by the internationally managed hotels
although a good source of demand is possible as more
expats locate to Nay Pyi Taw for locally managed
hotels that can upgrade their rooms for long-stay use.
The sudden move of the capital from Yangon to Nay
Pyi Taw in 2006 and subsequent relocation of
government employees did not take into account the
retail needs of the new occupants. The existing town of
Pyinmana provided some rudimentary facilities and the
building of the traditional Myoma market went some
way to help with the hardship. However, mass retail
began to appear in 2009 with the opening of the first
phase of Junction Nay Pyi Taw by Shwe Taung Group.
HISTORICAL SUPPLY OF MASS RETAIL SPACE
Approximate Net Lease able area square metres
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Source: Picon-Deed Research
Since then another three malls have opened their
doors: one other mall in the Southern Zone and two
more in the Northern Zone close to the high-end
residential area of Ottara Thiri Township. Due to the
lack of entertainment options the retail malls provide
one of the main sources of activity in the city with
numerous food and beverage outlets and cinemas.
Generally the better-managed malls can be quite busy
during peak periods of the day and at weekends.
SPENDING POWER FOR NAY PYI TAW ZONES
Lewe
Tatkon
Detkhina Thiri
Ottara Thiri
Pobba Thiri
Pyinmana
Zayar Thiri
Zabu Thiri
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Supply at start of year
New supply
0 20 40 60 80 100 120
Aggregate Points
Source: Picon-Deed Research / 2014 Population and Housing
Census
The 2014 Population and Housing Census provides a
number of different criteria that indicates spending
power within townships in the absence of income data.
By far the highest is Zabu Thiri Township, which also
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Nay Pyi Taw Property Market Report September 2019
contains the highest proportion of government
employees. This compares to similar grading for some
Yangon townships such as North Dagon and Thaketa.
It would appear that townships that have less
involvement with government operations fare less well
in terms of economic development and these tend to
also be predominantly rural.
OFFICE SECTOR
INDUSTRIAL
Nay Pyi Taw possesses significant amounts of land that
could be used for industrial purposes and there is
already some light industrial activity in Dekkhina Thiri
Township, between the city and the Yangon-Mandalay
express highway. However, recent visits suggested that
much of the industrial infrastructure in place is used
more for warehousing purposes.
On the southern side of the Nay Pyi Taw Airport – and
actually within the bounds of Bago Region – there is a
dedicated industrial estate at the town of Yeni,
eponymously called the Yeni Industrial Township. This
2,000-acre zone (809.3 hectares) is only a few hundred
metres off the old Yangon-Mandalay highway and
provides large plot sizes, excellent transport links
(including a rail line) and reliable electricity. Existing
tenants include several large Chinese-owned garment
factories. The southern township of Lewe is
predominantly rural and less developed and provides
an ample supply of potential labour for future factories.
Currently many Yangon-based companies, both local
and foreign, have also set up in Nay Pyi Taw due to the
proximity to government officials, especially in the
business-to-government realm. Although there is no
official record, it appears that the majority of foreign
entities are from Japan and China, with their emphasis
on infrastructure projects.
The other significant users of office space are
multilateral organisations and international nongovernment
organisations that also have a need to be
near government decision-makers. At present most
companies and organisations opt to lease landed hotel
rooms (especially suites) or villas located in various
parts of Nay Pyi Taw. No actual purpose-built office
exists in Nay Pyi Taw to accommodate such
companies.
In mid-2018 12 of the 17 United Nations agencies
present in Myanmar started operations in Nay Pyi Taw
using space at the Union of Myanmar Federation of
Chambers of Commerce and Industry building in
Ottara Thiri Township. Despite the movement towards
Nay Pyi Taw, in reality many offices are lightly staffed
and key officials and executives – especially in the
corporate sector – still choose to live in Yangon and
commute to Nay Pyi Taw based on meetings. Over
time this will be expected to change as Myanmar’s
economy develops further.
FUTURE DEMAND
Future demand in Nay Pyi Taw for both residential and
office sectors is likely to be driven by government
pressure, likely regardless of which political party is in
power, to exert pressure on INGOs and United Nations
offices to shift at least part of their operations to Nay
Pyi Taw, with diplomatic missions likely to follow not
too far behind.
At present the UN agencies in the capital are nearly all
headquartered in the Union of Myanmar Federation of
Chambers of Commerce and Industry building but in
future they are likely to overwhelm the facility and be
inclined to move to a larger space.
Many companies are likely to consider Nay Pyi Taw to
not be worth the effort unless they have business with
the government or other institutions already in the
capital. However, businesses that work on a businessto-government
platform will likely further cement their
links in Nay Pyi Taw and might, in the relatively near
future, have need or more sizeable, dedicated office
space. As Nay Pyi Taw develops further the city could
witness a tipping point where the entry of INGOs,
companies and embassies lead to a greater move to
the capital.
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Nay Pyi Taw Property Market Report September 2019
DIPLOMATIC SHIFT FROM YANGON
The current situation is that all embassies are officially
located in Yangon despite the capital city designation
being changed in 2006. Since this time the
government has made occasional campaigns to
persuade the embassies to move. The political climate
in Myanmar was one justification for staying put but a
more practical consideration is the lack of facilities,
especially hospitals and schools that would need to be
provided before expats would consider moving there
with families in large numbers.
The government has provided 120 plots of 5.7 acres
each in a specially designated diplomatic zone in
Dekkhina Thiri Township for purpose of constructing
embassies but so far no activity has taken place.
KEY OFFICERS OF UNITED STATES FOREIGN
SERVICE POSTS
Key Officers of Foreign Service Posts
40
35
30
25
20
15
10
5
0
Brasilia
Rio/Sao Paulo
Nur-Sultan
Almaty
Source: Picon-Deed Research / United States Department of
State Telephone Directory
Generally the move of embassies can take a
considerable amount of time due to the bureaucratic
nature of government operations and also the
unwillingness to move from what are usually exciting
cities such as Sydney or Rio de Janeiro to more
soulless new capitals. It is expected that the relocation
may practically take as long as 10 years from start to
finish.
Some countries are establishing liaison offices in Nay
Pyi Taw as the precursor to an eventual full relocation.
In general a move to a new capital is more efficient as
many diplomatic functions need to be close to their
host government and a move by some embassies may
lead to others to do likewise given the better chance to
build relationships with officials by being actually
based there.
The most important take generally from countries
eventually moving their embassies is that the majority
of staff will be based in the new capital, even though
Rabat
Casablanca
Abuja
Lagos
many large countries will also have a significant
consular presence in Yangon due to it being the
commercial centre of the country.
CONCLUSION
Nay Pyi Taw is a story of increments: the military
government surprised everybody by up and moving to
the new capital, likely pleasing Yangon’s residents who
no longer had to live with daily motorcades.
Diplomatic missions and UN bodies have been
extremely coy about relocating to Nay Pyi Taw but bitby-bit
the overall resistance to the capital is lessening.
And in contrast to Yangon, Nay Pyi Taw offers some
compelling advantages in terms of clean air and very
light traffic.
When international grade healthcare becomes
available in Nay Pyi Taw along with better transport
connections especially by air and rail, then perhaps
more expatriate families will be more amenable to a
move to the capital and Nay Pyi Taw can become a
more organic city.
The Myanmar Real Estate Specialists
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Kyauktada Township, Yangon
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