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 administrative capital of British Burma in 1826 but with sea access, various attractions and an the city was already a busy trading hub, whose abundance of raw materials. The state therefore sheltered river harbour made it an ideal landing for offers strong investment potential in oceangoing vessels. manufacturing, tourism, logistics, mining and agriculture. Today the city is the fourth largest by population after Yangon, Mandalay and Nay Pyi Taw and The city of Mawlamyine is the state’s capital and effectively acts as the commercial capital of the same values and foundations that have southern Myanmar. underpinned its historical importance remain valid today and point to its future development. The Mawlamyine is also increasingly integrating into British established Mawlamyine as the Southeast Asia; especially Thailand where it has Mon State Property Market Report January 2020 strong economic linkages through the Greater like the rest of the national railway system the Mekong Subregion East-West Economic Corridor, rolling stock and lines are deteriorating and in which commences in Mawlamyine, crosses need of significant upgrade. The current journey Thailand, Laos and then ends at the port of Da from Yangon takes at least 10 hours, which is Nang in Vietnam. around 60% more travel time than by road. The line runs from Yangon through the tourist town of Mon State is divided into two districts and 10 Kyaikto through Mawlamyine, the seaside town of townships. Mawlamyine township represents the Ye and terminates in Dawei, in Tanintharyi Region. main commercial centre of the state and home to Dawei is currently the most likely location of the the greatest concentration of wealth and income. main deepsea port planned for the country so an upgraded railway could be an important INFRASTRUCTURE AND FACILITIES component of the future logistics network in Myanmar thus benefitting the towns situated along the line. Road transport

There is a highway connecting Yangon to Mon Electricity State and then further south to Dawei on then to Kawthaung in the deep south of the country. The Mon State saw an enormous boost to its electricity road condition from Yangon to Mawlamyine is supply with the unveiling of the Mawlamyine reasonable even during the monsoon season. Power Plant by Myanmar Lighting (IPP) Co., Ltd Travel time is around six hours. Improvements in starting in 2014. The power plant generates using road infrastructure are ongoing and likely to natural gas offtake from the Zawtika gas pipeline accelerate. by PTT. The installed capacity of 230 megawatts should be able to provide electricity to Mon State There is also a road connecting Mawlamyine with and also potentially to Tanintharyi Region to the the Thai-Myanmar border towns of Mae Sot and south, which is not yet connected to the national Myawaddy. However, the road is in poor condition grid. 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 There are a number of oil and gas blocks located runway and facilities that could allow the airport to on Mon State’s coastline and if more fields prove accommodate narrowbody jet aircraft. economically viable then additional pipelines could pass through Mon State, allowing for far greater access to natural gas to generate low cost Rail transport electricity that could help power rapid industrial development. Mon State is connected by railway to Yangon but

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Mon State Property Market Report January 2020

TOURISM IN MON STATE are helping to support the growth of tourism in the state. One of the most important tourism destinations in the country is located in Mon State, namely HOTEL SECTOR - MAWLAMYINE 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 SUPPLY OF MID AND UPPER SCALE ROOMS IN granite boulder at the top of a mountain. MAWLAMYINE 600

500

400

300 Rooms

200

100

0 2014 2015 2016 2017 2018 2019 Supply at start of year New supply Source: Picon-Deed Research

Due to the relative isolation of the country and Mawlamyine is the main city in the state but also a poor transport infrastructure Mawlamyine was little tourism destination in its own right, and a hub for visited apart from a few intrepid travelers and local daytrip excursions. The city has a pleasant and businesspeople. The hotel market reflected this charming riverfront and many colonial buildings. with limited supply prior to the opening up of the country in the early part of the 2010s. The positive Other destinations include the terminus of the changes to both business and tourism led to new infamous Death Railway at Thanbyuzayat, which hotels springing up and also providing far better has a detailed and interesting museum. The beach quality rooms and facilities than those provided areas of Setse and Ye are unlikely to rival Ngapali before. At the end of 2019 the number of rooms but could be part of the tourism mix in the state. in Mid and Upper Scale categories stands just below 600 rooms. 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 AGODA LOCATION RATING OF MAWLAMYINE Thaton. The main roads of Thaton are liberally HOTELS 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

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Mon State Property Market Report January 2020

Many of the higher-grade hotels in Mawlamyine UPPER-SCALE HOTEL SUPPLY IN KYAIKTO are spread out along the riverfront area and other TOWNSHIP hotels are scattered all over the city. In many 450 tourism locations hotels often cluster in a number 400 of areas, meaning tourism infrastructure can be 350 developed in these pockets, which include 300 250 restaurants, bars and other activities. The wide

Rooms 200 dispersion of hotels and limited public transport in 150

Mawlamyine negatively impact the attractiveness 100 of the city as a tourism destination. 50

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply at start of year New supply

Source: Picon-Deed Research

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. HOTEL SECTOR - KYAIKTO

Kyaikto Township consists of the main town of the PROPORTION OF SUPPLY BETWEEN KYAIKTO same name, through which the main highway (BASE) AND KYAIKTIYO (MOUNTAIN) passes, along with the Theinzayat Railway Station; and is the main dropping off point for the tourist hotspots. Kinpun village (base) Kinpun village is around 15km from Kyaikto town 38% and is one of two main areas where hotels are Kyaiktiyo located. Kyaikhtiyo is the name of the area up the (Mountain) 62% 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. Source: Picon-Deed Research

Access from Kyaikto Township to the Golden Rock The supply of rooms in the main mountain tourism involves bus or private transport along a wide and area outnumber those on the base, which lacks the well-maintained road. It is expected over time for views and cooler altitude. At present the mountain further improvements to be made to the local area has land constraints that will hinder the infrastructure to boost tourism activities. development of more supply and alternative locations will be sought after.

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Mon State Property Market Report January 2020

RESIDENTIAL SECTOR - MAWLAMYINE Nay Pyi Taw where most government employees live, have higher scores than 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.

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.

RETAIL SECTOR - MAWLAMYINE INDUSTRIAL SECTOR

At present there is little by way of industrial estates As in other cities of Myanmar traditional shopping in Mon State or Mawlamyine, which has the habits persist with the usual mix of shophouses Mawlamyine Industrial Estate (163 acres and 300+ and vibrant markets. Restaurants and local tea industries), which is government managed with shops provide the main dining options. very poor infrastructure. Also planned is Kyauktan SPENDING POWER INDEX OF SELECTED Park. However, since Mon State partnered up with TOWNSHIPS IN MYANMAR IPP and the Ministry of Energy to build a 230- megawatt natural gas-fired power plant in Pathein Mawlamyine, the city and state now have a reliable Dawei electricity supply, which is positive news for would- Myeik be industrialists.

Aungmyaythazan (Mandalay)

Mahaaungmyay (Mandalay) MANUFACTURING COMPANIES PER 100,000

Mawlamyine POPULATION - 2019

Chanayethazan (Mandalay) Nay Pyi Taw Bago Za Bu Thi Ri (Nay Pyi Taw) Kayah 0 50 100 150 200 250 Yangon Source: Picon-Deed Research / 2014 Population and Housing Magway

Census Chin Sagaing Mandalay Excluding Yangon, the township of Mawlamyine Tanintharyi Mon has the third-highest spending power based on an 0 50 100 150 200 250 300 index covering various indicators of the 2014 census. Only one of the main business-focused Source: Picon-Deed Research / Statistical Yearbook 2019 townships in Mandalay, as well as the township in

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Mon State Property Market Report January 2020

Mon State contains the highest number of more than 500,000 acres of land covered by manufacturing companies per 100,000 population rubber plantation, and plenty more on the way. in the country. Trading links to Thailand and small Myanmar’s rubber production hub is in the town of processing facilities for rubber and fish are a Mudon but anyone keeping their eyes open significant source of such entrepreneurial activity during a drive within the state is sure to see rubber in the state and the potential for further sheets being dried at the side of roads. development of the SME sector that can be realized with better infrastructure and access to Nearly all of Myanmar’s latex production is finance. exported in low grade form (Ribbed Smoked Sheet grades 4 and 5) to China, which buys about 70% of the overall production.

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 At the present time, incentives to improve the electricity supply, leaves the state ideally placed as quality of the processed rubber are limited with a mining processing hub. This is especially true in marginal financial gain to be had but the the context of the Greater Mekong Subregion’s development of industries requiring better quality East-West Economic Corridor and Southern rubber should help improve the sector in the state. Economic Corridor, which links Dawei in Tanintharyi Region west-east to Vung Tao in The first ever investment fair was held in Mon State Vietnam. Dawei has a long but unfulfilled history of at the end of 2019 which showcased the state’s being the proposed home to a deep-sea port and potential to delegates from Myanmar and abroad special economic zone. and highlighted the commitment of the state to welcoming further activity to boost the economy. Within Mon State the island of Kalagote, which lies about 100 kilometres (60 miles) south of MON STATE MASTER PLAN Mawlamyine, has very recently been mooted as a potential deep-sea port. This would potentially A master plan for Mon State was submitted to the allow large container ships to dock in deep water chief minister in late 2019 by Surbana Jurong at Kalagote and connect both ends of the East- consultants. The plan covered Kyaikto, West and Southern Economic Corridors with ports Mawlamyine, Bilugyun Island to west of allowing containerized shipping. Mawlamyine and Ye City in the south of the state.

Such connectivity is bound to dramatically Overall the plan recommends a more structured increase the attractiveness of industrial production development of each location compared to the in Myanmar, as well as making it a through-point haphazard organic growth in the past. For Kyaikto for the transport of goods across the Southeast the plan recommends better transport links as well Asian landmass as a focus on eco-tourism. A new CBD is envisioned for Mawlamyine along with further Mon State is already a large rubber producer, with

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Mon State Property Market Report January 2020 integrated industrial development and more advantages that bode well, such as tourism thoughtful transport infrastructure. locations, abundant raw materials and access to Yangon and a potentially a future deep water port. A new international airport is recommended on the lesser developed Bilugyun Island along with an The development of a power plant in Mon State emphasis on enhancing its existing rural, small could prove pivotal to providing regular and manufacturing and craft-based economy. Ye City affordable energy to energise budding industrial is slated to contain industrial functions adding development, especially with continued transport value to local raw materials especially fishing, while infrastructure improvements. also acting as a logistical base linking Yangon and the southern state of Tanintharyi. With further growth comes the development of real estate, especially in the industrial and hotel CONCLUSION sectors, but also retail as prosperity leads to changing shopping habits and then residential Mon State was a significant economic player with the growing need to build better quality during the development of the country over the housing. past centuries. Like the rest of Myanmar, the state languished during the isolation and economic Mon State looks set to see rapid expansion as part decline of the 1960-2010 period. Now the state is of the exciting Myanmar growth story that is emerging to a much brighter future with many evolving quickly.

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