While not showing any spectacular growth the Phnom Penh real-estate sector remained robust in the first quarter of 2022, with many areas offering scope for optimism, according to a press conference hosted by CBRE Cambodia.
CBRE is the world’s largest commercial real estate services and investment firm based on 2021 revenue.
The presentation which was titled Q1 2022 Market Insights: Navigating the New Norms focused on 4 main areas, namely office, retail, residential, and landed properties.
Changes in the Phnom Penh Office market
According to Google mobility ratings, Cambodians are traveling to offices (within the country) freely as they were during pre-Covid levels, this was in comparison to Thai’s who had 12 percent less mobility than before the pandemic.
Therefore Cambodia boasting the second-highest level of vaccinations in ASEAN had helped people not only return to work but also the overall office real-estate sector.
According to the CBRE, this meant an estimated 100,000 square meters of Net Leasable Area (NLA) entering the market in 2022. This did not though necessarily mean that market was currently strong, with centrally owned occupancy dropping by 1.2 percent compared with Q4.
They further added that overall rentals were unlikely to rise dramatically by the end of the year, with further competition within the sector merely keeping rents largely at current levels, rather than boosting expansion.
Interestingly the major shift they had noticed from 2021 was in that companies were now taking advantage of low rents to “upscale” to bigger premises, or ones in more desirable locations and with better quality.
The Phnom Penh Retail Sector
According to the report the retail sector is likely to follow similar trends over the coming period, with up to 200,000 sqm of NLA coming online in 2022 with Daluch Chin, Manager of CBRE Cambodia’s Valuation & Advisory Services team adding “We are observing players with strong capacity to draw international brands through various means using this capacity to fill retail space; presenting a greater variety for end consumers ranging from state of the art entertainment experiences to the milestone entry of Swedish clothing brand H&M”.
During Q1, 44 new brands had entered the Cambodian retail sector through community malls and shopping malls six of whom were well-known international brands, such as the aforementioned H&M.
Answering a question directly from Cambodia Investment Review Chin added that these new brands “were genuine companies of interest, such as fashion and lifestyle, rather than just being food franchises”.
Q1 saw the opening of Chip Mong Sen Sok Mall, Prince Times Square and a number of smaller retail centres, with Lawrence Lennon the Managing Director of CBRE Cambodia adding that the Chip Mong Sen Sok Mall was “genuinely unique and like nothing else either in Asia, or Europe that I have seen. We are starting to see real innovation with regards to community malls”.
So-called community malls made up 93 percent of all Q1 retail buildings, with occupancy levels at an impressive 66.6 percent across all retail space.
Stagnation in the Condominium market
As expected sales in the condominium market remained largely stagnant, with three new completions in the high to mid-end market, but no new launches in Phnom Penh.
They further added that as many as 3,500 units originally slated for competition in 2021 had been delayed until 2022, but that if there were no further setbacks 13,000+ would be completed by the end of the year. So far only 5 percent of the yearly projection had been completed by the end of the first quarter.
Answering a question directly from Cambodia Investment Review about when the market might return to pre-Covid levels Lennon replied “We have to be optimistic. The country has been excellent at reopening and dealing with the pandemic and there has been lots of innovation and new players entering the market, but in the end, it is still outside forces that are affecting us. If China suddenly reopens for example the condo market could bounce right back, but for now, we need to be patient and work with what we have”.
The landed property “borey” sector
The one area that had seen consistent growth according to the report was in the capital’s landed property segment, known locally as “borey” with Kinkessa Kim, Associate Director of Research and Consulting Services stating that “The borey market has remained an area of continued attraction for developers, interestingly though we are seeing a significant increase in interest from new players, with nearly half of new launches being introduced by first-time developers”.
Overall the market had seen 39 new developments over the previous 6 months, with some key examples being the Angkor Palace and Prince One Tropica. It was though generally in the affordable housing market which had seen the majority of sales, principally in the $50,000 – 170,000 bracket.
So while the overall real estate market within the capital can be seen as one in a state of flux, overall indicators were that while Q1 did not particularly see much growth it had not only remained consistent but seemingly offers the right indicators for future growth.