Cambodia Investment Review
CBRE Cambodia’s Fearless Forecast 2025 highlights key trends across Cambodia’s property market, providing a comprehensive overview of occupancy rates, prime rents, and the current property cycle. The presentation by CBRE Cambodia Chairman Marc Townsend also sheds light on the ongoing challenges in the construction sector and the evolving landscape of Phnom Penh’s real estate market.
Key Indicators Reflect a Shifting Market
The report indicates that the Cambodian property market is facing a downward trend in several metrics. Office occupancy rates are estimated at 65.1%, while retail spaces have a slightly lower occupancy rate of 61.8%. Both sectors are experiencing year-on-year declines, underscoring the subdued demand in commercial properties.
Prime rents also reflect this downward trend, with office rents averaging $27 per square meter and retail rents at $22.6 per square meter. These figures highlight the challenges landlords face in maintaining competitive pricing in a slow market.
In the residential sector, over 3,200 condominium units were launched in 2024, while 240 serviced apartments were completed. The high-end condominium sales price is currently at $2,650 per square meter, and Grade A serviced apartment rents average $19.3 per square meter. These numbers reflect a competitive market environment as developers strive to attract a diminishing pool of buyers and tenants.
Construction Investment Slows, Projects on Hold
The report points to a sharp decline in construction investment, which has not fully recovered since the pandemic-induced slowdown. As of November 2024, the number of construction projects and their total investment value remain significantly below pre-pandemic levels. Public and residential developments dominate the pipeline, but the pace of new launches has visibly slowed.
GreenNet database comparisons between 2023 and 2024 reveal a 14.7% drop in projects under construction. Conversely, completed projects increased by 6.5%, suggesting developers are focusing on finalizing existing works rather than initiating new ones. Projects on hold grew by 6.3%, further emphasizing the cautious approach of the sector amidst market uncertainties.
Phnom Penh’s Property Cycle: Growth Paused
Phnom Penh’s real estate landscape, which has experienced rapid urbanization and expansion over the past two decades, now faces challenges in sustaining its growth. The capital’s growth trajectory from seven districts in 2006 to 14 districts in 2020, covering 692.46 square kilometers, has significantly slowed. While long-term growth remains a possibility, with a projected population of six million by 2035, current demand across residential and commercial properties is muted.
The report highlights a decline in residential launches and commercial completions. Condominium and landed property launches have decreased since their 2019 peak, with fewer projects entering the market annually. Similarly, the number of office and retail project completions has slowed, reflecting subdued investor and developer confidence.
Branded Operators Signal Optimism
Despite challenges, the entry and expansion of international branded operators suggest a positive outlook for the hospitality sector. Existing brands like Novotel, Ascott, and Hyatt Regency are joined by upcoming entrants such as The Ritz-Carlton and Wyndham Hotels. This influx signals continued confidence in Cambodia’s potential as a destination for business and leisure.
Outlook for 2025
CBRE Cambodia’s report provides a cautious yet optimistic outlook for 2025. While market challenges persist, ongoing urbanization, infrastructure development, and international investment hint at long-term opportunities. However, stakeholders must navigate a complex landscape, balancing affordability, demand, and sustainable growth to unlock the market’s potential.
The Fearless Forecast underscores the need for strategic collaboration among developers, investors, and policymakers to ensure that Cambodia’s property market not only recovers but thrives in the coming years.