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Myanmar | Research Reports

Mon State PROPERTY MARKET REPORT JANUARY 2020

State set to benefit from strategic position

Summary

• Industrial potential from raw materials and location • Growing awareness of tourism potential in the state • Strong spending power supports further retail development • Hotel development set to continue as Mon State develops further

INTRODUCTION Mon State is in a strategic location close to Yangon with sea access, various attractions and an abundance of raw materials. The state therefore offers strong investment potential in manufacturing, tourism, logistics, mining and agriculture. The city of Mawlamyine is the state’s capital and the same values and foundations that have underpinned its historical importance remain valid today and point to its future development. The British established Mawlamyine as the

administrative capital of British Burma in 1826 but the city was already a busy trading hub, whose sheltered river harbour made it an ideal landing for oceangoing vessels. Today the city is the fourth largest by population after Yangon, Mandalay and Nay Pyi Taw and effectively acts as the commercial capital of southern Myanmar. Mawlamyine is also increasingly integrating into Southeast Asia; especially Thailand where it has

Mon State Property Market Report January 2020

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strong economic linkages through the Greater Mekong Subregion East-West Economic Corridor, which commences in Mawlamyine, crosses Thailand, Laos and then ends at the port of Da Nang in Vietnam. Mon State is divided into two districts and 10 townships. Mawlamyine township represents the main commercial centre of the state and home to the greatest concentration of wealth and income. INFRASTRUCTURE AND FACILITIES Road transport There is a highway connecting Yangon to Mon State and then further south to Dawei on then to Kawthaung in the deep south of the country. The road condition from Yangon to Mawlamyine is reasonable even during the monsoon season. Travel time is around six hours. Improvements in road infrastructure are ongoing and likely to accelerate. There is also a road connecting Mawlamyine with the Thai-Myanmar border towns of Mae Sot and Myawaddy. However, the road is in poor condition and with a 40-kilometre detour via Hpa-An. Future road improvements will benefit Mon State providing better supply chain connections for industry and tourism. Air transport Mon State has one functioning airport in Mawlamyine Township. The airport did host international flights in 2013 with a Nok Air connection to Mae Sot using a 36-seater turboprop, although this was suspended due to poor runway conditions. Currently there is a twice-weekly flight by Myanmar National Airways to Yangon, and with plans for future upgrades to the runway and facilities that could allow the airport to accommodate narrowbody jet aircraft. Rail transport Mon State is connected by railway to Yangon but

like the rest of the national railway system the rolling stock and lines are deteriorating and in need of significant upgrade. The current journey from Yangon takes at least 10 hours, which is around 60% more travel time than by road. The line runs from Yangon through the tourist town of Kyaikto through Mawlamyine, the seaside town of Ye and terminates in Dawei, in Tanintharyi Region. Dawei is currently the most likely location of the main deepsea port planned for the country so an upgraded railway could be an important component of the future logistics network in Myanmar thus benefitting the towns situated along the line. Electricity Mon State saw an enormous boost to its electricity supply with the unveiling of the Mawlamyine Power Plant by Myanmar Lighting (IPP) Co., Ltd starting in 2014. The power plant generates using natural gas offtake from the Zawtika gas pipeline by PTT. The installed capacity of 230 megawatts should be able to provide electricity to Mon State and also potentially to Tanintharyi Region to the south, which is not yet connected to the national grid.

There are a number of oil and gas blocks located on Mon State’s coastline and if more fields prove economically viable then additional pipelines could pass through Mon State, allowing for far greater access to natural gas to generate low cost electricity that could help power rapid industrial development.


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TOURISM IN MON STATE One of the most important tourism destinations in the country is located in Mon State, namely Kyaikhtiyo or the Golden Rock. This is a well-known Buddhist pilgrimage site for locals and also Thais. It is a small pagoda built on the top of a granite boulder at the top of a mountain.

Mawlamyine is the main city in the state but also a tourism destination in its own right, and a hub for daytrip excursions. The city has a pleasant and charming riverfront and many colonial buildings. Other destinations include the terminus of the infamous Death Railway at Thanbyuzayat, which has a detailed and interesting museum. The beach areas of Setse and Ye are unlikely to rival Ngapali but could be part of the tourism mix in the state. While it is not on the tourist radar, visitors in Mon State going to either Mawlamyine or Kyaikto will invariably pass through the crossroads town of Thaton. The main roads of Thaton are liberally sprinkled with colonial era buildings, which if preserved could help to improve Thaton as a potential stopping-off point. Beyond Mon State’s boundaries but very much part of the same area is Hpa-an in Kayin State. There, hardy visitors can climb Mt Zwekabin and take in panoramic views, while elsewhere there are extensive cave complexes to explore. Overall there would be enough tourism attractions to increase the number of days local and foreign visitors could spend in the state if greater integration and development takes place. Already, a growth in better quality hotels and other facilities

are helping to support the growth of tourism in the state. HOTEL SECTOR - MAWLAMYINE

SUPPLY OF MID AND UPPER SCALE ROOMS IN MAWLAMYINE

Source: Picon-Deed Research

Due to the relative isolation of the country and poor transport infrastructure Mawlamyine was little visited apart from a few intrepid travelers and local businesspeople. The hotel market reflected this with limited supply prior to the opening up of the country in the early part of the 2010s. The positive changes to both business and tourism led to new hotels springing up and also providing far better quality rooms and facilities than those provided before. At the end of 2019 the number of rooms in Mid and Upper Scale categories stands just below 600 rooms. AGODA LOCATION RATING OF MAWLAMYINE HOTELS

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100

200

300

400

500

600

2014 2015 2016 2017 2018 2019

Room

s

Supply at start of year New supply


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Many of the higher-grade hotels in Mawlamyine are spread out along the riverfront area and other hotels are scattered all over the city. In many tourism locations hotels often cluster in a number of areas, meaning tourism infrastructure can be developed in these pockets, which include restaurants, bars and other activities. The wide dispersion of hotels and limited public transport in Mawlamyine negatively impact the attractiveness of the city as a tourism destination.

HOTEL SECTOR - KYAIKTO Kyaikto Township consists of the main town of the same name, through which the main highway passes, along with the Theinzayat Railway Station; and is the main dropping off point for the tourist hotspots. Kinpun village is around 15km from Kyaikto town and is one of two main areas where hotels are located. Kyaikhtiyo is the name of the area up the mountain at an altitude of 1,100 metres. This area includes the famous Golden Rock pagoda and is one of main tourist drawcards in the country, especially for religious pilgrimages. Access from Kyaikto Township to the Golden Rock involves bus or private transport along a wide and well-maintained road. It is expected over time for further improvements to be made to the local infrastructure to boost tourism activities.

UPPER-SCALE HOTEL SUPPLY IN KYAIKTO TOWNSHIP


Compared to Mawlamyine the hotel market is better developed, largely due to the appeal of the area to domestic and Thai visitors even during the period of relative isolation. Over 200 rooms in the Mid-scale and above categories were already operating by 2005. However, it took another five years before new supply was added after the opening up of the country and improvements in the transport infrastructure connecting to Yangon. Since that time supply has nearly doubled up to 2018, with more likely to come soon. PROPORTION OF SUPPLY BETWEEN KYAIKTO (BASE) AND KYAIKTIYO (MOUNTAIN)


The supply of rooms in the main mountain tourism area outnumber those on the base, which lacks the views and cooler altitude. At present the mountain area has land constraints that will hinder the development of more supply and alternative locations will be sought after.

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Room

s

Supply at start of year New supply

Kinpun village (base)38%

Kyaiktiyo (Mountain)

62%


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RESIDENTIAL SECTOR - MAWLAMYINE The residential options are landed properties and low-level townhouses and shophouses all over the city. No modern condominiums exist or are in the process of being developed as the city is spread out. However, one landed gated development is nearing completion with Shwe Myaing Garden Estate by Golden Rich Land Co., Ltd. offering 45 units in the eastern part of the city.

RETAIL SECTOR - MAWLAMYINE As in other cities of Myanmar traditional shopping habits persist with the usual mix of shophouses and vibrant markets. Restaurants and local tea shops provide the main dining options.

SPENDING POWER INDEX OF SELECTED TOWNSHIPS IN MYANMAR

Source: Picon-Deed Research / 2014 Population and Housing Census

Excluding Yangon, the township of Mawlamyine has the third-highest spending power based on an index covering various indicators of the 2014 census. Only one of the main business-focused townships in Mandalay, as well as the township in

Nay Pyi Taw where most government employees live, have higher scores than Mawlamyine.

The city remains a trading entrepot, especially with nearby Thailand and spending can be seen in the large traditional markets but also one of the first modern air-conditioned retail centres to be developed outside of the main three cities. Ocean Supercenter opened its doors in the city in 2016 and has been successful in attracting residents to the modern retail experience including F&B franchises and cinema. INDUSTRIAL SECTOR At present there is little by way of industrial estates in Mon State or Mawlamyine, which has the Mawlamyine Industrial Estate (163 acres and 300+ industries), which is government managed with very poor infrastructure. Also planned is Kyauktan Park. However, since Mon State partnered up with IPP and the Ministry of Energy to build a 230-megawatt natural gas-fired power plant in Mawlamyine, the city and state now have a reliable electricity supply, which is positive news for would-be industrialists. MANUFACTURING COMPANIES PER 100,000 POPULATION - 2019

Source: Picon-Deed Research / Statistical Yearbook 2019

0 50 100 150 200 250

Za Bu Thi Ri (Nay Pyi Taw)

Chanayethazan (Mandalay)

Mawlamyine

Mahaaungmyay (Mandalay)

Aungmyaythazan (Mandalay)

Myeik

Dawei

Pathein

0 50 100 150 200 250 300

Mon

Tanintharyi

Mandalay

Sagaing

Chin

Magway

Yangon

Kayah

Bago

Nay Pyi Taw


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Mon State contains the highest number of manufacturing companies per 100,000 population in the country. Trading links to Thailand and small processing facilities for rubber and fish are a significant source of such entrepreneurial activity in the state and the potential for further development of the SME sector that can be realized with better infrastructure and access to finance.

In fact, Mawlamyine State’s location between the mineral rich Kayin State (to the north and east) and Tanintharyi Region (south), coupled with a reliable electricity supply, leaves the state ideally placed as a mining processing hub. This is especially true in the context of the Greater Mekong Subregion’s East-West Economic Corridor and Southern Economic Corridor, which links Dawei in Tanintharyi Region west-east to Vung Tao in Vietnam. Dawei has a long but unfulfilled history of being the proposed home to a deep-sea port and special economic zone. Within Mon State the island of Kalagote, which lies about 100 kilometres (60 miles) south of Mawlamyine, has very recently been mooted as a potential deep-sea port. This would potentially allow large container ships to dock in deep water at Kalagote and connect both ends of the East-West and Southern Economic Corridors with ports allowing containerized shipping. Such connectivity is bound to dramatically increase the attractiveness of industrial production in Myanmar, as well as making it a through-point for the transport of goods across the Southeast Asian landmass Mon State is already a large rubber producer, with

more than 500,000 acres of land covered by rubber plantation, and plenty more on the way. Myanmar’s rubber production hub is in the town of Mudon but anyone keeping their eyes open during a drive within the state is sure to see rubber sheets being dried at the side of roads. Nearly all of Myanmar’s latex production is exported in low grade form (Ribbed Smoked Sheet grades 4 and 5) to China, which buys about 70% of the overall production.

At the present time, incentives to improve the quality of the processed rubber are limited with marginal financial gain to be had but the development of industries requiring better quality rubber should help improve the sector in the state. The first ever investment fair was held in Mon State at the end of 2019 which showcased the state’s potential to delegates from Myanmar and abroad and highlighted the commitment of the state to welcoming further activity to boost the economy. MON STATE MASTER PLAN A master plan for Mon State was submitted to the chief minister in late 2019 by Surbana Jurong consultants. The plan covered Kyaikto, Mawlamyine, Bilugyun Island to west of Mawlamyine and Ye City in the south of the state. Overall the plan recommends a more structured development of each location compared to the haphazard organic growth in the past. For Kyaikto the plan recommends better transport links as well as a focus on eco-tourism. A new CBD is envisioned for Mawlamyine along with further


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integrated industrial development and more thoughtful transport infrastructure. A new international airport is recommended on the lesser developed Bilugyun Island along with an emphasis on enhancing its existing rural, small manufacturing and craft-based economy. Ye City is slated to contain industrial functions adding value to local raw materials especially fishing, while also acting as a logistical base linking Yangon and the southern state of Tanintharyi. CONCLUSION Mon State was a significant economic player during the development of the country over the past centuries. Like the rest of Myanmar, the state languished during the isolation and economic decline of the 1960-2010 period. Now the state is emerging to a much brighter future with many

advantages that bode well, such as tourism locations, abundant raw materials and access to Yangon and a potentially a future deep water port. The development of a power plant in Mon State could prove pivotal to providing regular and affordable energy to energise budding industrial development, especially with continued transport infrastructure improvements. With further growth comes the development of real estate, especially in the industrial and hotel sectors, but also retail as prosperity leads to changing shopping habits and then residential with the growing need to build better quality housing. Mon State looks set to see rapid expansion as part of the exciting Myanmar growth story that is evolving quickly.

Contact email: [email protected]

Unit 1408, Sakura Tower, 339 Bogyoke Aung San Rd

Kyauktada Township, Yangon

Website: www.picondeed.com

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