Cambodia Investment Review

AmCham’s Great Debate: Outlook on Cambodia’s Real Estate and Construction Sector in 2023 and Beyond

AmCham’s Great Debate: Outlook on Cambodia’s Real Estate and Construction Sector in 2023 and Beyond

Harrison White

AmCham’s Great Debate brought together prominent figures from the business and property sector in Cambodia to share their perspectives and discuss the current outlook for the sector and its future growth over the next 5 to 10 years.

The country’s rapid economic growth in recent years has led to an increase in demand for housing and commercial real estate, making the sector an attractive investment opportunity however is currently facing economic headwinds with rising interest rates and international investors demand dampened.

The Great Debate provided a platform for stakeholders to share their insights and opinions on the current state of the sector, as well as its future potential. Participants engaged in lively discussions on topics such as the challenges faced by the sector, the impact of new technologies, and the role of government regulations in shaping its future.

Panel Discussion 1: The Cambodian Real Estate Market Today

  • Ms. Kinkesa Kim, Associate Director at CBRE Cambodia
  • Mr. Ranarith Iv, CEO (Cambodia) Head at RHB Bank
  • Dr. Ben Li, Founder and Chairman of Urban Village & Factory Phnom Penh
  • Mr. Anthony Galliano, President of AmCham Cambodia
The Cambodian Real Estate Market Today.

The discussion started with Anthony Galliano bringing attention to the difficult market conditions, with a decline in prime office and retail rates by about 15%, rising interest rates, and potential oversupply in the market along with geopolitical risks. He asked the panel if they would buy property now.

Dr. Ben Li commented that the worldwide downturn in 2022 was driven by the US and China, but Cambodia’s GDP is still expected to grow by over 4% in the coming years. The market has shifted towards local demand for residential properties, particularly in low to medium-range condominiums, and away from luxury.

Read more: IPS confident of healthy real estate sector in 2023 as developers diversify projects to attract foreign investment to Cambodia

To make a property purchase, Dr. Li suggests considering factors such as capital gain, rental yield, and potential currency fluctuations. In Cambodia, the rental yield is strong, and the US dollar is stable, making it a good time to buy.

Mr. Ranarith Iv said that his bank is still optimistic about Cambodia, but the high costs of US funding are causing a liquidity problem, making it difficult for people to access loans to buy property. The return of tourism and foreign investment from China is a positive sign, but with banks offering over 7% in term deposits, lending rates may increase above Cambodia’s average rental yields of 8%.

Reasons for purchasing property the most factor

Ms. Kinkesa Kim believes that the decision to buy a property depends on the individual’s reason for buying and their source of funding, as each situation is different. If someone is looking to live in the property, now is a good time to consider, but if they are an investor, term deposits may offer higher returns.

Dr. Ben Li, Founder and Chairman of Urban Village & Factory Phnom Penh.

When asked about whether to rent or buy, especially for a young family, Dr. Ben Li believes it is important to consider rental yield. Although Phnom Penh’s yield has dropped from 8% to 6%, it is still good compared to other cities in the region. Capital gains before COVID were upwards of 15% annually, making it a good time to buy.

Mr. Ranarith Iv believes that most Cambodians are buyers by nature and that the market is likely at the bottom of the downturn. Ms. Kinkesa Kim agrees and believes there is long-term optimism for Cambodia’s economy.

Silver linings in Cambodia’s property sector

Data showed that the city is likely in a property recession with an increase in supply and a lack of buyers. The silver lining, according to Dr. Ben Li, is local demand, as developers have shifted their focus toward local buyers and there is growth in the population and urbanization in Phnom Penh.

Read more: What are the ‘silver linings’ of COVID in Cambodia’s real-estate sector?

Mr. Ranarith Iv believes the return of Chinese buyers is the silver lining, and Ms. Kinkesa Kim agrees, adding that the market is better suited for local buyers and the fundamentals of the market remain strong, even after a trend of decline over the past three years.

Ms. Kinkesa Kim, Associate Director at CBRE Cambodia.

To mitigate the risk of developers not delivering projects on time or at all, Dr. Ben Li suggests looking into the developer’s track record and being wary of new players in the market. Ms. Kinkesa Kim suggests buying completed units to completely remove this risk.

Panel Discussion 2: The Cambodian Real Estate Market in the Next 5-10 Years

  • Mr. Arnaud Darc, Founder and CEO of Thalias
  • Ms. Catherine Chan, Founder and Executive Director of Urban Village & Factory Phnom Penh
  • Mr. Long Dimanche, Preah Sihanouk Province
  • Mr. Thomas O’Sullivan, CEO of
Panel Discussion 2: The Cambodian Real Estate Market in the Next 5-10 Years.

The discussion was started by Thomas O’Sullivan who mentioned the possibility of a market correction in the property market between 2021 and 2022. He stated, “Prior to the Covid pandemic, some developments were simply overpriced. However, over the past three years, prices have come down, making the property more accessible for Cambodian buyers and a larger pool of international investors.”

When discussing the market’s current state, O’Sullivan said, “The market is seeing increased interest in the first part of 2023 and prices are much closer to being realistic. It’s certainly a buyer’s market now, with plenty of good deals available.” He estimated that 41,000 condominiums have been completed in Cambodia and another 34,000 will be completed in the next five years.

Landlords must be realistic about prices

Catherine Chan commented on the future of the property market, stating, “The property market must rise after the US Federal Reserve has printed so much money over the last three years, over $1 trillion. These funds must be invested somewhere.” She added, “Urbanization is also on the rise in Cambodia and the Chinese currency is widely used, which helps with investment.”

Ms. Catherine Chan, Founder and Executive Director of Urban Village & Factory Phnom Penh.

Arnaud Darc shared his positive outlook on the Cambodian economy, saying, “The Cambodian economy looks good post-COVID, after a difficult few years. The World Bank is forecasting over 6% growth this year. Cambodia is a resilient and young country that will bounce back strong from the last three years.”

He emphasized the importance of location and price when investing, “Location and price of the lease are vital. I found that malls were charging at the higher ends and since that has dropped, we feel this could be interesting for the hospitality sector. We always aim for a maximum of 10% revenue for leasing and

Sihanoukville master plan and rebranding

Long Dimanche discussed the future of Sihanoukville, stating, “Sihanoukville is now looking to bounce back after the recently opened expressway and is ready to welcome more tourists and investors. The government is planning to spend over $400 million under the city’s masterplan, and we expect the population to expand to 1 million by 2030 from 300,000 now.”

Read more: Canopy Sands Development Breaks Ground on $16B Coastal Entertainment Hub for Bay of Lights New Township

He also discussed the hot issue of uncompleted buildings in the city, saying, “We now have a policy to solve the issue of uncompleted buildings in Sihanoukville, which we think accounts for more than 1,000. Most of these buildings had no construction licenses and some have no proper drainage system. These buildings will have to be demolished first.”

Mr. Arnaud Darc, Founder and CEO of Thalias.

Catherine Chan discussed the need for rebranding Sihanoukville to improve its international image, saying, “Sihanoukville needs to undergo a rebrand to improve its international image. Working with the media will be vital. This is important for other cities, including Phnom Penh, because investors look at the entire country, so if we can bring Siem Reap, Sihanoukville, and Phnom Penh together, it will help the entire country grow.”

Sustainability emerging as a new trend for developers

Thomas O’Sullivan asked the panel about the lack of sustainability by developers in Cambodia and whether they think this will change in the coming years. Catherine Chan responded, “As developers, we want to give back to the community. For example, at FACTORY, we opted to use the space as the biggest co-working space in the city, instead of a commercial space, to provide a platform for the under 30’s to thrive.”

Long Dimanche again addressed the problem of unfinished buildings in Sihanoukville and outlined the steps they are taking to resolve it and ensure future development is done sustainably.

“We must first establish a database of investment projects, including the details of the owners, locations, development status, and the zone they belong to. Next, we must engage in a business proposal and consultation with all stakeholders to properly assess whether the building can be completed or needs to be demolished,” said Long Dimanche.

Over 100 stakeholders attended the event.

The panelists concurred that building trust in the Cambodian government among investors and enhancing Cambodia’s reputation globally are crucial for the industry’s success. They acknowledged that, at times, short-term difficulties may be necessary to achieve long-term progress.

The AmCham Real Estate and Construction Committee serves its members and the real estate industry in developing and promoting programs and services that will enhance the Members’ businesses. The Committee hosts several networking events at various venues across Phnom Penh, bringing together the leaders in the real estate sector and providing a forum where they could meet with each other and exchange ideas.

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