In a recent interview with business consultancy Aquarii, private and commercial real estate company IPS have said they are confident 2023 will bring back the bigger deals essential for a healthy sector, as inbound foreign investment continues its recovery to pre-pandemic levels.
Country Director, Mr. Adam Fitzpatrick, added that despite concerns over the amount of stock due to enter the market, long-term investments in property and land are still appealing to foreign investors in a generally stable market.
“The market has weathered the pandemic storm quite well and is currently in a good place. There’s a lot of stock, which is a concern, but good projects will always do well and we’re seeing a bit more sophistication in terms of product from developers hoping to stand out from the crowd,” Fitzpatrick said.
“We would expect the oversupply to apply downward pressure on pricing but that’s not always the reality.
There are a number of examples of well-known high-quality office buildings in the city and residential properties that are largely vacant, which suggests the purchasers are not investing for the rental yield, but purely for capital gain or even for other reasons,” he added.
IPS is currently dealing with several off-plan projects at the moment with generous payment plans, which continue to prove popular with foreign investors. Opportunities include ODOM, Times Square 306, and Circle Village with additional projects coming soon. New projects in Siem Reap include Rose Apple Square and Angkor Grace – both of which are having a lot of success.
Opportunities for foreign investors
According to Fitzpatrick, for foreigners, these kinds of investment opportunities are very easy and hassle-free because we have a strong track record of managing units and securing long-term tenants. The capital gain coupled with the rental income makes it a very attractive proposition – as long as investors don’t expect to double their money flipping units in the short term.
In his opinion regarding land, while pricing in downtown Phnom Penh is challenging, elsewhere in Cambodia there are a lot of good opportunities.
“Outer Phnom Penh and the surrounding provinces, beachfront plots in coastal locations and Siem Reap have always been solid options for investors. We provide services for foreign buyers to acquire land in Cambodia, de-risking the purchase and providing them with a secure ownership structure, further adding to the appeal,” Fitzpatrick said.
“Land will always do well in Cambodia – it’s a very popular asset class and as the country continues to develop and urbanize, land prices will only go one way,” he added.
External factors will influence the market
Speaking on the main influences in the market in 2023, Mr. Fitzpatrick said it will be the global economy, including all the associated increased costs of doing business, geopolitical risk, and regional tensions.
“All of those things are important and are definitely increasing investor caution, delaying decision making and impacting risk appetite. However, I’m still very optimistic about Cambodian real estate and I do believe we’re relatively insulated from global economics,” he said.
“The game-changer for Cambodia is the recent re-opening of China allowing the free movement of people both domestically and internationally. China is hugely important to the Cambodian economy and their inability to travel and seek investment has had a major impact on the market here,” he added.
However, the agent believes that investors will have to see what happens after Chinese New Year and review the extent of the spread of COVID, but commented that all being well he feels there’s a long-awaited pent-up appetite from that market to invest overseas, travel overseas and buy international real estate – and a good proportion of that money will find its way to Cambodia.
He commented that mainland Chinese, Hong Kong and Macau-based corporations are already looking to reignite projects that have been indefinitely on hold over the past few years.
Market insights key for investors
Talking about his advice for real estate in Cambodia, he advised investors to remain cautious but be brave, seek professional advice and guidance, negotiate hard and do their due diligence.
“There are plenty of good opportunities in the market, but you have to understand real estate in Cambodia and the nuances of doing business here. If you want to make a splash in the commercial market, do your research, find a trusted agent, and focus on relationships with advisors, and good opportunities will be introduced in time,” Fitzpatrick added.
Those interested in seeing more top picks from IPS can view the dedicated section on their website that highlights opportunities that they believe offer great potential in the current market.