The post-Covid-19 future of Myanmar’s office market
DO YOU HAVE A SUCCESS STORY?
We’d like to hear from you.
Tue, 21 Apr. 2020
Oxford Business Group
CONTRIBUTING PARTNERSOxford Business Group
With 119 record cases and five deaths as of April 20, the status of the Covid-19 outbreak in Myanmar has not officially reached the critical levels experienced elsewhere.
An April 14 report from the World Health Organisation (WHO) said that the situation in Myanmar is still characterised by “clusters” of Covid-19 transmission – a step up from “sporadic” but below “community” transmission status.
However, low levels of testing mean there is likely to be a high number of undetected cases, according to the International Growth Centre. Indeed, local media suggested that signs of community transmission were beginning to emerge on the same day as the WHO classification was released.
In order to limit the further spread of the virus, many companies have adopted “work from home” practices, and offices across the country are mostly empty.
Remote working boom
Some firms in Yangon began to trial work from home policies in mid-March, following the lead of international companies with remote working experience.
By the end of that month, the list of firms allowing at least part of their workforce to operate from home included banks, media outlets and telecoms operators such as Ooredoo and Telenor.
Meanwhile, the government ordered half of its employees to stay at home as of March 26.
Working remotely in Myanmar has been made more feasible in recent years by expanding internet access: the total number of internet users rose from 18m, or 33.1% of the population, in July 2019, to 22.2m, or 40.8%, in January 2020, although this still lags behind the ASEAN average of 66.1%.
Alongside remote work, some companies have looked to flexible alternatives to traditional office spaces, in the form of co-working facilities, serviced offices, virtual spaces and meeting room rental.
The future for flexible office space
It is as yet unclear what broader impact Covid-19 will have on the flexible office market in Myanmar.
“There are those who believe that Covid-19 could seriously damage the industry in the long term, as tenants adopt and normalise work from home practices, which render other flexible spaces unnecessary,” Hugo Slade, managing director of Yangon-based Slade Property Services, told OBG. “On the other hand, there are those in Yangon’s co-working industry who believe the pandemic could act as a catalyst to encourage more tenants to adopt flexible working practices.”
A move towards flexible options, allowing businesses to downsize their traditional office space and reduce rental costs, could present an opportunity for those players in Myanmar who offer co-working spaces, virtual offices and meeting room rentals.
“Those start-ups, co-working spaces and other small businesses who can ride out the storm will emerge even stronger,” CK Goyal, co-founder of Draper Startup House, a Singapore-headquartered organisation that operates a co-working space in Yangon, told OBG.
The current health crisis may also have implications for the operation and design of alternative working space arrangements.
Many flexible, open-plan co-working spaces are currently empty as a result of social distancing rules. By contrast, some more traditional office spaces – which may feature serviced suites or partitions between work stations – have remained open with enhanced hygiene procedures.
Traditional office space recovery
Prior to the pandemic, prospects for the office market had been enhanced somewhat by the relaxation of investment regulations opening up the insurance and banking sectors to foreign businesses.
“The office rental market had recently started to stabilise, following a period of rental correction,” Richard Emerson, managing director of Emerson Real Estate, told OBG. “The last five years had been characterised by falling rental rates, which led, in turn, to relatively high occupancy rates.”
Meanwhile, office owners are expecting an initial quiet period in the immediate aftermath of the outbreak as leasing activity continues to suffer from uncertainty, according to Slade Property Services. Nevertheless, owners anticipate that the demand for new leases for traditional offices will return to pre-pandemic levels three to five months into recovery.
Going into 2021, there may be an uptick from businesses that are in a position to upgrade to higher-quality properties ahead of the curve, before a larger number of businesses look to expand the following year and make up ground lost in the pandemic.
To view the original article from Oxford Business Group, please click the link below.