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Spotlight on Yangon
Spotlight on Yangon 3
Yangon Overview
History
Myanmar, formerly known as Burma, is opening up after 60 years
of self-imposed isolation and international corporates are eager to
capitalise on new opportunities, such as offering the countrys 60
million people goods and services advanced economies take for
granted, like mobile phones and bank accounts. Once the capital
of Myanmar, Yangon remains as the commercial centre and main
transit hub of the country. Formerly a small fishing village surrounding
the prominent Shwedagon Pagoda, the city was transformed during
colonial rule under the British from 1824 to 1948.
Economic Overview
While there is a severe lack of transparency in Myanmar, economic
sanctions that have been held in place have devastated the economy
and have resulted in an extremely impoverished population (nominal
GDP per Capita for Myanmar in 2012 was USD834 with an estimated
population of 61.59 million). However, the country is one of the
wealthiest in Southeast Asia in terms of natural resources with
bountiful supplies of natural gas, oil, gemstones, lumber and teak
wood.
City Layout
The lack of substantial economic activity and construction in Yangon
has left the city roughly the same as it was under colonial times. The
grid system that was implemented in the early 1900s constitutes the
historic centre of the city located at the convergence of the Yangon
and Bago Rivers where most of the colonial buildings are located.
Moving north toward Kandawgyi and Inya Lakes leads to the majority
of the old residential parts of town with large colonial-style houses
located in the proximity. The area is also home to the University of
Yangon, Yangon Mingaladon Airport and several golf courses. Several
other large residential projects have been built across Hliang and
Bago Riversnamely, Pun Hliang Golf Estate and Star City.
10%
0%
-10%
2012
2011
2010
2009
2008
2007
2006
2005
-20%
-30%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010
2011
2012
2013
2011
2012
% Growth 2011-2012
Germany
UK
Singapore
20%
France
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Malaysia
20%
Visitor Arrivals
30%
Korea
40%
USA
50%
Japan
2004
China
Number of Visitors
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2003
Thailand
0%
Spotlight on Yangon 5
Current Airlift
Located on a former British airbase developed during the Second
World War, Yangon Mingaladon Airport is approximately 15 kilometres
north of Yangons city centre. In 2012 it handled 96% of international
flights into Myanmar along with 3.1 million passengers, just over
its current capacity of 2.7 million passengers a year. Current air
connectivity to Yangon originates primarily out of Asia with direct
flights to China, Thailand, Cambodia, India, Hong Kong, Japan, South
Korea, Singapore, Malaysia, Vietnam, Taiwan, India and Qatar. The
Sule Pagoda
New Infrastructure
Table 1: Direct Flights to Yangon Mingaladon Airport New International Routes 2012/13
Origin
Flights
per
Week
Carrier
Approx.
Seats per
Flight
Starting
Date
Seoul
Korean Air
138
4Q 2012
Taipei
China Airlines
200
4Q 2012
Tokyo
ANA
34
4Q 2012
Doha
Qatar
120
4Q 2012
Bangkok
14
AirAsia
180
4Q 2012
Singapore
Singapore
Airlines
323
4Q 2012
Frankfurt
(via Phuket)
Condor
268
4Q 2012
Hong Kong
Dragonair
169
1Q 2013
Kolkata
Air India
144
1Q 2013
Singapore
Tiger Air
180
3Q 2013
Mae Sot
Nok Air
189
3Q 2013
Bangkok
1-3
Business Air
221
3Q 2013
Taipei
1-3
TransAsia
170
4Q 2013
(Seasonal)
The recent downward revisions of car import taxes and the influx of
visitors have rapidly resulted in congested roads and the need for a
larger international airport in the near future.
Major overpasses are planned for Shwegondaing and Hledan
intersections and are expected to be completed by late 2013. The
government is also said to be drawing expertise from urban planners
in Singapore to create a city with better public transport infrastructure.
The Yangon City Government is anticipating significant growth in
visitor arrivals, which will easily surpass the current capacity of 2.7
million air passengers a year.
Spotlight on Yangon 7
Frankurt
Seoul
Tokyo
Kunming
Kolkata
Taipei
Hanoi
Guangzhou
Hong Kong
Yangon
Doha
Bangkok
Phnom Penh
Ho Chi Minh City
Kuala Lumpur
Singapore
Weaknesses
Opportunities
Threats
Strategic location between the Peoples Republic of China and India Visitors perception of poor value for money
Robust market demand
Job creation
Technology transfer
Natural disasters
Conservative
Mid-Range
High
2015
2020
2015
2020
2015
2020
1,528,020
2,815,279
1,829,943
3,680,669
3,009,663
7,489,006
1.83
3.82
2.19
5.00
3.61
10.18
Spotlight on Yangon 9
Implementation
In order to ensure that the social and economic benefits of tourism are distributed equitably, and to improve national employment and income
generation, six programs consisting of 38 projects costing USD 486.8 million have been put in place over 2013-2020.
Key Objectives Activities
Time Frame
2013-2014
2013-2015
2013-2020
2014-2020
2014-2020
2013-2020
2013-2015
2014-2020
2013-2020
2013-2020
2014-2017
2014-2020
2013-2020
2013-2016
2014-2015
2014-2018
2013-2020
Ensure the integration of tourism considerations into national and local transportation planning
2014-2020
2014-2020
2014-2015
2013-2020
Create a strategic marketing map that includes a range of niche market actions
2014-2020
Raise national awareness about the nature and significance of responsible tourism
2013-2020
2013-2020
421
1,000
6,000
1,000
5,000
4,000
1,293
3,000
400
2,000
1,000
0
974
1,500
1,500
2012
2013
Existing Supply
585
5,752
4,752
2,474
2,874
2014
2015
Proposed
2016
2017
Under Construction
The large proportion of anticipated future supply in the next few years
originates from existing hotels converting current office space in their
respective properties (Chatrium, Traders, Strand) and hotels opening
after years of dormancy. Prior to the economic reforms promoted by
the government, hotels in Yangon were suffering from low occupancy
rates and resorted to converting and letting out some of their rooms
(with office space being undersupplied in Yangon). With pressure from
the government to increase room supply, hotels are now reconverting
the office space into saleable rooms. The PARK ROYAL has just
completed at the end of 2012, a conversion of 65 office units back into
guestrooms.
Hilton Worldwide announced in March 2013 that it signed a
management agreement for a 300-room Hilton-branded hotel.
Shangri-La, which operates the Traders Hotel, will open a Shangri-La
Residence later this year and a Shangri-La Hotel in 2016.
Accor will open in the first quarter of 2014 a 366-room Novotel Yangon
Max hotel in two towers, including a ballroom, conference rooms,
caf, wine bar and a French restaurant. Hilton Hotels have signed a
management agreement to manage the Hilton Yangon (in the mixeduse Centerpoint Tower). The 300-room hotel is scheduled to open in
mid-2014, offering three restaurants, sky bar and approx 1,400 square
metres of event space.
Spotlight on Yangon 11
Market Outlook
While the growth in visitor arrivals, lack of room supply and the allure
of one of Asias last frontier markets can lead to greater opportunities
for early entrants, conducting business is still very challenging given
the lack of a transparent legal framework and hence any investment
carries a significant level of risk.
Ambiguity in the foreign investment law is likely to worry investors and
other potential setbacks in human rights abuses around the country
will directly affect whether sanctions remain suspended. The first full
democratic election in 2015 will determine if the country is truly set to
embrace change.
Chinese, Singaporean and Thai companies conducted business in
Myanmar when the country was still subject to economic sanctions and
are more accustomed to the current legal framework and challenges
compared to new entrants. Foreign developers entering the market
without local partners will face greater challenges.
Contributors
Andrew Langdon
Executive Vice President, Strategic Advisory
andrew.langdon@ap.jll.com
Frank Sorgiovanni
Vice President, Research Asia
frank.sorgiovanni@ap.jll.com
Jonathan Ottevaere
Vice President, Strategic Advisory
jonathan.ottevaere@ap.jll.com
Calvin Li
Associate, Strategic Advisory
calvin.li@ap.jll.com
Jones Lang LaSalles Hotels & Hospitality Group serves as the hospitality industrys global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership
properties; convention centers; mixed-use developments and other hospitality properties. The firms more than 265 dedicated hotel and hospitality experts partner with investors and owner/operators around the
globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and
hospitality real estate advisor in the world totaling nearly US$25 billion, while also completing approximately 4,000 advisory, valuation and asset management assignments. The groups hotels and hospitality
specialists provide independent and expert advice to clients, backed by industry-leading research.
Dallas
8343 Douglas Avenue, Suite 100
Dallas TX 75225, United States
tel +1 214 438 6100
fax +1 214 438 6101
Denver
1225 Seventeenth Street
Suite 1900
Denver, CO 80202, United States
tel +1 303 260 6500
fax +1 303 260 6501
Dubai
Emaar Square,
Building 1 Office 403,
Sheikh Zayed Road,
PO Box 214029, Dubai, UAE
tel +971 4 426 6999
fax +971 4 365 3260
Dsseldorf
Kaistrasse 5
40221 Dsseldorf, Germany
tel +49 211 13006 0
fax +49 211 13399 0
Exeter
Keble House, Southernhay East
Exeter EX1 1NT
tel +44 1392 423696
fax +44 1392 423698
Frankfurt
Wilhelm-Leuschner-Strasse 78
60329 Frankfurt, Germany
tel +49 69 2003 0
fax +49 69 2003 1040
Glasgow
150 St Vincent Street
Glasgow G2 5ND, United Kingdom
tel +44 141 248 6040
fax +44 141 567 6678
Istanbul
Yesim Sk. No:2 Akatlar - Levent
Istanbul 34335, Turkey
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fax +90 212 350 0806
Jakarta
Jakarta Stock Exchange
Building Tower 2, 19th Floor,
Sudirman Central, Business District
Jl. Jend Sudirman Kav 52-53
Jakarta 12190, Indonesia
tel +62 21 2922 3888
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Leeds
St Pauls House, Park Square
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London
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London W1B 5NH, United Kingdom
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Los Angeles
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Lyon
55 Avenue Foch
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Madrid
Paseo de la Castellana, 51
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Manchester
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Manchester, M1 1RG, United Kingdom
tel +44 161 828 6440
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Marseille
2 Place Sadi-Carnot
13002 Marseille, France
tel +33 4 9509 1313
fax +33 4 9509 1300
Melbourne
Level 21, Bourke Place
600 Bourke Street
Melbourne VIC 3000, Australia
tel +61 3 9672 6666
fax +61 3 9600 1715
Mexico City
Monte Pelvoux 111, Piso 5
Lomas de Chapultepec
Mxico, DF 11000, Mexico
tel +52 55 5980 8054
fax +52 55 5202 4377
Miami
2333 Ponce de Leon Blvd, Suite 1000
Coral Gables, Florida 33134
United States
tel +1 305 529 6345
fax +1 305 529 6398
Milan
Via Agnello 8
20121 Milan, Italy
tel +39 2 8586 8672
fax +39 2 8586 8670
Moscow
Kosmodamianskaya Nab. 52/3
Moscow 115054, Russia
tel +7 495 737 8000
fax +7 495 737 8011
Munich
Ludwigpalais
Ludwigstrasse 6
80539 Munich, Germany
tel +49 89 2900 8882
fax +49 89 2900 8888
New Delhi
Level 9 Tower A
Global Business Park,
Mehrauli Gurgaon Road, Sector 26,
Gurgaon 122002
Haryana, India
tel +91 124 4605000
fax +91 124 4605001
New York
330 Madison Avenue
New York NY 10017, United States
tel +1 212 812 5700
fax + 1 212 421 5640
Paris
40-42, rue La Botie
75008 Paris, France
tel +33 1 4055 1718
fax +33 1 4055 1868
Perth
Level 29, Central Park
152-158 St Georges Terrace
Perth WA 6000
tel +61 8 9322 5111
fax +61 8 9481 0107
Rome
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00187 Rome, Italy
tel +39 6 4200 6771
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San Francisco
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tel +1 415 395 4900
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So Paulo
Rua Joaquim Floriano, 72 cj. 97
04534-000 So Paulo, SP, Brazil
tel +55 11 3071 0747
fax +55 11 3071 4766
Shanghai
25/F Tower 2 Plaza 66
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Jing An District
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Singapore
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tel +65 6536 0606
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Sydney
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tel +61 2 9220 8777
fax +61 2 9220 8765
Tokyo
4th Floor, Prudential Tower
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tel +81 3 5501 9240
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Washington D.C.
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tel +1 202 719 5000
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COPYRIGHT JONES LANG LASALLE 2013 All rights reserved. No part of this publication may be published without prior written permission from Jones Lang LaSalle. The information in this
publication should be regarded solely as a general guide. Whilst care has been taken in its preparation no representation is made or responsibility accepted for the accuracy of the whole or any
part. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making
forward projections involves assumptions regarding numerous variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome,
and we draw your attention to this factor.