Luxury in Myanmar: 'A Long-Term Investment'

“Every man has a crazy hobby,” said U Thiri Thein Than, an automotive engineer from Yangon who also has a home in Tokyo. “For me, it’s cars and watches.”

For years Mr. Thiri Thein Than, 40, has done his higher-end shopping overseas. But in March, he visited a boutique that the Swiss watch company Franck Muller had just opened in the upscale Sedona Hotel overlooking Yangon’s Inya Lake — the company’s 44th location worldwide, and Myanmar’s first monobrand luxury watch store.

Mr. Thiri Thein Than bought a Master Calendar Lunar watch in pink gold with a tiny moon that rises and falls with the lunar calendar. He said the watch, which sells here for $33,500, has drawn compliments at his office and makes him feel distinguished in crowds.

“This is my jewelry,” he said of the watch on a recent morning, sitting in jeans and a blue dress shirt beside a giant white vase of fresh orchids at the hotel, where the Muller boutique occupies 2,153 square feet.

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Tadayuki Azuma, manager at the Franck Muller boutique in Yangon, brings a watch into the VIP room at the shop. Credit Minzayar Oo for The New York Times

Myanmar’s economy, stunted for decades after a 1962 military coup, has grown swiftly since 2012, when landmark elections ushered in dramatic political reforms and a wave of foreign investment. Profits from the domestic timber, minerals, and oil and gas industries had been fueling urban property markets and a high-end domestic jewelry trade, but international brands were virtually nonexistent before the opening — even here in Yangon, Myanmar’s business capital and most cosmopolitan city.

Many residents still patronize ramshackle wet markets and sidewalk tea shops, where a full meal costs far less than a Starbucks latte. But by 2015, the country’s economy was growing by 7 percent annually, up from 5.6 percent in 2011, and new high-rises and shopping malls were sprouting alongside the city’s majestic, if dilapidated, colonial-era buildings.

Nearly all of Yangon’s new retail space targets low- to mid-range buyers, and shoppers who can afford luxury goods typically buy online or on trips to Singapore, Thailand or Europe, several analysts and businesspeople said. But a few overseas luxury brands are beginning to sell watches and other goods here, with an eye toward future sales.

“It’s nice to be there at the very beginning,” Nicholas Rudaz, director of Franck Muller, said in a telephone interview from the brand’s headquarters in Switzerland. “And, of course, this is a long-term investment.”

Even with the new malls, Yangon’s total retail space is still minuscule, compared with that of Bangkok and other Southeast Asian shopping hubs. And Antony Picon, Myanmar managing director at the commercial real estate company Colliers, said he did not expect major luxury brands to enter Myanmar for another five years to a decade, although a few luxury cosmetics chains might open locations in Yangon’s upscale hotels, a common pattern in emerging markets.

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A magazine shoot at the sales showroom for Jaguar Land Rover, one of Yangon’s first luxury brands. Credit Minzayar Oo for The New York Times

But in the longer term, the country’s retail growth could be explosive, said Gregory Miller, managing partner at Myanmar Capital Partners, a Bangkok-based financial services company with staff in Yangon. “There’s no point in trying to draw comparisons with Laos and Cambodia because they’re not rich with resources,” Mr. Miller said. Myanmar is “going to be more like Thailand.”

He said demand for luxury retail would come not only from the existing moneyed elite, but also from an emerging middle class and Myanmar émigrés coming home to pursue business opportunities.

The situation “will change simply because the head of sales will be saying, ‘We need to be in Myanmar,”’ he added. “And some people will take the leap.”

There already are signs of demand: For example, Jaguar Land Rover, BMW and Mercedes-Benz have all opened Yangon showrooms since 2012.

Okkar, a Myanmar national who uses just one name, is a Ford brand manager at a Yangon car dealership selling Ford, Jaguar and Range Rover models. He said government officials drive the sales of luxury sport-utility vehicles, and that many luxury car buyers here have large fleets.

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The Swiss Time Square watch boutique in Yangon sells brands such as Rolex, Tissot, Breitling and Rado. Credit Minzayar for The New York Times

Another sign of growth is Swiss Time Square, a sleek, multi-brand watch boutique that opened in 2013 on the fringes of Yangon’s Golden Valley district. Prices start at a few hundred dollars for Tissot and Rado models, and rise to $1.3 million for a diamond-and-ruby-studded Rolex.

“Wearing Rolex watches is just like cars: If you are buying a BMW or Mercedes car, it means other people will see that you are a rich person,” Tay Zar Win Htoo, a sales supervisor, said on a recent morning at the two-story boutique, which sits near some mobile-phone shops on a traffic-choked boulevard about four miles from downtown Yangon.

However, he said, the more common sale was $500 to $1,000, with as many as 30 watches of each popular brand being sold in the months before Thadingyut, a Buddhist holiday in October.

Engineers, construction workers and other staff members inside Sule Square, the 7.4-acre shopping mall and office complex being completed in Yangon. Its retail area is to feature luxury brands such as Rolex, Emporio Armani and Montblanc. Credit Minzayar Oo for The New York Times

Luxury elements are being included in several mixed-use real-estate projects in Yangon’s downtown. One is the Landmark Development, a two-million-square-foot project scheduled to open in 2019 or 2020 with a luxury Peninsula Hotel, according to the project’s developer, Singapore-based Yoma Strategic Holdings.

Cyrus Pun, the company’s head of real estate, said in an email that the Landmark’s luxury component, though small at first, could expand as Myanmar’s retail market matures.

On a nearby block, Sule Square, a project of Shangri-La Group, a Hong Kong-based conglomerate, was nearing completion early this summer. Yinn Mar Nyo, Sule Square’s director of sales and marketing, said the project’s 64,583-square-foot retail component would include Myanmar’s first monobrand Rolex store.

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A street vendor in front of Sule Square in Yangon. Many residents still prefer to shop at open-air markets rather than Western-style malls. Credit Minzayar Oo for The New York Times

But Ms. Yinn Mar Nyo added that the mall’s primary target will be mid-market consumers. “There are buyers for luxury goods, but in terms of volume, it may not be there,” she said during a tour of the high-ceilinged lobby, speaking over the drone of buzz saws and the clank of hammers.

Ivan Pun, a Myanmar entrepreneur whose father, Serge Pun, is the executive chairman of Yoma Strategic Holdings, said he came to a similar conclusion about Myanmar’s retail sector after briefly operating a pop-up store with international designer clothing.

“The target audience that I had in my mind — of girls in their 20s and 30s with a high disposal income — they came through the door,” Mr. Pun said of the project, which he said featured “cool kid” brands like 3.1 Phillip Lim and Mary Katrantzou, with prices ranging from $300 to more than $7,000. “But that did not translate into sales.”

Mr. Pun, who previously worked in New York and Beijing, said he was now talking with international luxury brands and would be open to partnerships with some of them here, but that none was rushing to open a monobrand shop in Yangon because Myanmar's luxury market was so new.

For now, his start-up, Pun + Projects, is opening restaurants in Yangon that would not look out of place in Brooklyn or East London. One example is Rau Ram, a Vietnamese fusion restaurant whose menu features Hokkaido scallop crudo, lemongrass buttermilk fried chicken and a designer cocktail named “pho real.”

Source: The New York Times