Myanmar Real Estate & Construction Monitor recently spoke with the management team at Yoma Land to better understand how the COVID-19 outbreak has affected the company's operations and their view on the real estate sector in the post-pandemic period.
How was development at Yoma Central progressing prior to the COVID-19 outbreak?
The development was progressing well. As with all major projects in Yangon, the ground conditions are challenging and undertaking the first top-down basement to five levels in the city met with the usual problems of modern earthquake design and high ground water.
Now that the towers are emerging from the podium, visible work will appear to accelerate. Retail leasing started at the end of 2019 and was going very well, and we were planning to commence office leasing.
What were the major challenges in managing development in the past three months?
The biggest challenge in all aspects of development has been to avoid the trap of losing direction in a world that has taken a big knock and business confidence faltering.
By proactively fighting COVID-19 from as early as March, Yoma has been driving its own narrative. This is appreciated by all our existing owners, residents and tenants and business partners. We will be judged by our performance in the difficult times and not the easy years.
Has the COVID-19 outbreak been a significant setback for developments at Yoma Central?
The impact of COVID -19 has been threefold. First, the supply chain of essential components, such as façade, from China were delayed as factories closed in January.
Second, the curfew has reduced daily productive hours by a third and for a certain period site manning went down to 10% of planned levels.
Third, enforcing strict health protocols on site continues to reduce productivity but is essential as part of community protection. It is too early to accurately state the extent of the impact, but the contractor is working on mitigating the effect on the programme.
How do you view the residential, office and hotel market now, especially for high-end projects?
All occupiers of buildings are revaluating their requirements based on the COVID-19 experience. Whereas environmental concerns were the great disruptor 15 years ago, it is now “wellness”, and demand for a better built environment is being driven by consumers at all levels.
In terms of sectors, clearly the hotel and tourism market has taken the biggest shock. Nobody can predict how this industry will evolve in the next 10 years, but we have two of the strongest and most resilient brands as partners in Marriott and The Peninsula, both of which have survived pandemics and world wars before.
The residential owner occupier market came to a halt just before the Thingyan water festival as people focussed on fighting COVID-19 amid concerns about job security and the robustness of local SMEs. But, as the restrictions have lifted, we have seen an immediate resumption of interest at the high-end of the market with a new focus on security, safety and wellness, and this segment has enjoyed sales.
At the medium to low-end, sales are cautiously recovering as confidence returns. In Yoma Central we took a strategic long-term view to invest in quality in all respects and although the road ahead is unclear for everyone, we are confident this simple strategy will prevail.
Do you think there will be more happening in the sector in the next couple of years ahead, or will there be a lull in demand?
Much depends on how the Myanmar economy bounces back from the COVID-19 shock and how the international markets respond to that bounce back.
What we are hearing from international retail, office and residential investors is that they are in defer mode, not cancel mode. This means that big corporations will be looking at avoiding all non-essential capex investment for between six months to a year.
What is clear is that real estate is generally still considered less volatile than stock markets. Existing mixed-use developments will come under increasing pressure to compete on quality as the current projects under construction are completed through 2020 to 2022. All end users will have more choice. I don’t see any new construction starts on major projects until Yangon has at least a full year of decent growth behind it.