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Occupancy rates in Phnom Penh’s office and retail sector under 70% in Q2’22

Harrison White

An increasing supply of office and retail space is putting downward pressure on occupancy rates as international brands continue to expand their market presence in Cambodia, according to CBRE Cambodia’s second quarterly update for 2022.

CBRE Cambodia recently won the “Property Agency/Consultancy in Cambodia” and “Best Real Estate Agency Single Office Cambodia” with five stars at the Asia Pacific Property Awards 2022-2023 held in the UK. 

To read more about CBRE Cambodia winning the Asia Pacific Property Awards 2022 click here.

Centrally located offices in Phnom Penh maintain rental prices

Phnom Penh office occupancy rates have continued falling to 66.9% from approximately 87% in 2019 with over 40,000 sqm of more office floors expected to be completed in 2022. FTB Tower in Daun Penh was the only launching for the quarter with no new completions.

Average quoted rental prices for centrally located buildings have remained steady over the year however non-centrally located builds are reducing rental prices with incentives such as parking and F&B stores key for tenants.

Centrally located Grade A, B, and C buildings have all been maintained quarter-on-quarter priced at $27, $23, and $15 (not including maintenance and service fees) respectively.

Non-Central Business District (NCBD) located office buildings have recorded the biggest falls with Grade B and C NCBD falling 8.7% to $15 sqm and 3.1% to $13 sqm.

Occupancy rates for Phnom Penh’s Office sector fall to 66.9% in Q2’2022

The global property management firm Chestertons Cambodia launch was a major event during the quarter, with the brand presence responding to the growing demand in residential and commercial building management as the sector has mushroomed in recent years.

To read more about Chestertons Cambodia launch click here.

CBRE Cambodia Managing Director Mr. Lawrence Lennon commented that Phnom Penh’s office supply was at the end of the boom cycle dropping from near 90% occupancy rates in late 2019 to falling under 70% currently.

“Offices buildings that are both centrally located as well as can offer strong incentives for current and future tenants such as free parking or discounted management fees are still able to keep rental prices stable,” Lawerence said.

“In addition, ensuring that quality food and beverages outlets operate within the vicinity of your building will also increase appeal,” he added.

Phnom Penh’s retail supply set to double in 2022

Phnom Penh’s shopping centers have also recorded a fall in occupancy to 68% with over 190,000 sqm of retail space expected to be available by the end of 2022. The Chip Mong 598 Mall was the only completion with no new launches.

Prime shopping malls have fallen 1.4% to $27 sqm and the prime high street has remained steady at $23 sqm. Prime retail podiums have recorded the largest fall at 4.8% to $21 sqm and community malls have dropped 1.6% to $21 sqm.

According to the market update, 30 international and 16 local brands continued their expansion into the Cambodian market with continence stores and dominating the expansions as well as increasing foot traffic as COVID rates remain ultra-low.

Occupancy rates in Phnom Penh’s retail sector fall to 68.4% in Q2’2022

Thailand’s Big C Group purchase of the the well-known Kiwi Mart convivence store franchise was a major event during the quarter.

Speaking to Cambodia Investment Review previously Gary Hardy, Chief Operations Officer of Big C explained the company decided to expand further into the Cambodian market as the country continues along its strong growth trajectory.

To read more about the Big C plans for expansion in Cambodia click here.

The Cambodian government has launched the strategic framework and program for post-covid recovery 2021-2023, three pillars are based on the three R’s – Recovery, Reform, and Resilience as well as Economic diversification, trade facilitation, and laws on Special Economic Zones.

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