Local real-estate firm Lux Realty has opened its first franchise in the coastal city of Sihanoukville, with further regional expansion being key to the company’s growth plan.
Cambodia’s franchise business model in the real estate sector has been expanding with some other well-known franchise firms include Century 21 Cambodia, which is part of US-based Century 21 Real Estate LLC, and Keller Williams Realty Inc (KW).
This is in addition to affiliates of global real estate service and investment firms CBRE Group Inc and Knight Frank LLP in Cambodia.
Who are Lux Realty?
Lux Realty was formed in February 2021 by Crispin Kirby, who began his Cambodian real estate career at South East Asian Property Services (SEAPS). He then became a sales executive at LZ Seaview Residences in Sihanoukville, one of the more successful developments within the city.
According to Lux Realty, the company has achieved almost $4 million in sales since its formation. Kirby told Cambodia Investment Review that this was achieved by concentrating on newer developments often in less fashionable locales, as well as avoiding the less lucrative rental market entirely.
The ‘silver linings’ of Covid in Cambodia’s real estate sector
As previously reported by Cambodia Investment Review, while the pandemic has had an adverse effect on the economy, real estate was one area that has not only weathered the storm but also showcased a potentially lucrative area for investors.
“While Covid has obviously had terrible effects on the Cambodian economy, from a real estate perspective, it has created a buyers’ market as it were,” Kirby said.
Despite the growth of the company, it has not been without its problems. Kirby added: “Currently we have two very successful offices with great managers, but finding good reliable staff has been quite hard. This led us down the path of franchising. I believe that people prepared to put their own money in and have skin in the game will not only benefit themselves but will also help the company grow much quicker”.
While foreign companies such as Century 21 do offer franchises within the country and companies such as RealEstate.com.kh offer to share listings through their Customer Relationship Management (CRM) system, this marks the first fully indigenous end-to-end franchise product within the Kingdom.
How much does a Lux Realty franchise cost and what do you get?
Lux signed up their first franchisee this year, who for $50,000, gets regional exclusivity in Sihanoukville, extensive training, access to the company’s CRM, and access to the company’s large network of clients. Most importantly for the management, franchisees would also be part of the expansion of the company.
“We are perhaps different than other franchises in that we are all still part of the same team. We not only offer extensive support to our franchises but want them to be part of our success moving forward”.
Yet while franchisees get exclusive territories, some of them are more desirable than others. Currently, Lux Realty manages offices in Phnom Penh, Kampot and Kep. With Sihanoukville (inclusive of Koh Rong) now taken, this leaves only Siem Reap as the last ‘big hitter’ without an office, and thus the last major place the company needs to fill.
Lux does not feel that Siem Reap is the ‘end of the road’, however, when it comes to franchising in Cambodia, with the company further adding;
“One of the things we have noticed since our formation is that buying habits have changed when it comes to investments. Previously the obsession was with condos in Phnom Penh, but this is no longer the case. People simply want to invest in projects likely to give a return on their investment”.
Expansion outside of Cambodia
To this end, the company will be actively seeking franchisees throughout all areas of Cambodia, although it was not clear if this would also mean differing prices for franchisees depending on the desirability and potential of the location.
The company does not plan to stop with Cambodia and already has partnerships in place in Thailand. Lux is also tentatively exploring other emerging markets in the region as potential places for expansion.
For now, the focus is on revolutionizing the real estate sector in Cambodia through franchising. Quite whether the sector is ready to move towards this western model of consolidation through the franchise method is yet to be seen.