Q3 of Cambodia has appeared in the news pages of various countries and has become the focus of international attention. I have not expressed my views on this issue for a long time, because I think that behind this event, there is a part of deliberate smear and the possibility of false reporting, which is the result of a series of international struggles. Of course, it is understandable that there will be some relatively “Gray Industries” in the current development stage of Cambodia, this is a way for most of the developing countries. The most important is how the country reforms and responds. No matter China, Japan, Taiwan or other places have gone through this stage. Due to this situation, the rental and sales market of real estate in the Q3 has declined compared to the Q2.
The highlight of the Q3 should also be the most important event in Cambodia this year, namely, the opening of the Phnom Penh – Sihanoukville Expressway, which greatly shortened the transportation time between Phnom Penh and Sihanoukville. It only takes 2 hours to drive from the original 4-5 hours, greatly improving the transportation efficiency. I predict that the opening of the Phnom Penh – Sihanoukville Expressway will bring more employment and development opportunities for Phnom Penh.
Due to the influence of the news media, the rental market has shrunk. Beside wait-and-see of the foreign commercial market’s entry, some foreign workers who originally worked in Cambodia have returned home for safety reasons, leading to a rise in housing supply and a slight decline in rent cost in the Q3. It can be seen from the Q3 research report of CBRE that the decline of high-end apartments is lower than others. I believes that because the tenants are more concerned about the location, security and property service after the increase in supply, there is a higher demand for better quality and well managed buildings, which enables the rent cost to be maintained. (See Figure 1)
Figure 1: Apartment rents fell slightly in the Q3
According to the CBRE’s report, the rent cost of office buildings is about the same compared with the first two quarters in 2022, and the occupancy rate is about 69%. Significantly, the office buildings located in Main Town are expected to increase 35000 m2 by the end of the year (see Figure 2). The number of office buildings is expected to continue increase by 2023. It is worth observing whether the commercial market will recover in the post epidemic era. In my opinion, compared with the current office volume and market conditions, the future office occupancy rate is observable. However, the rental demand for office buildings should have bottomed out during the epidemic period from 2019 to 2021, and should continue to grow in the next few years. It is still worth considering for investors.
Figure 2: Office building occupancy rate and estimated supply in 2023
Source: CBRE CAMBODIA
In Q3, there are no new projects in Phnom Penh, which is rare. Besides the impressive sales of Times Square 306 which was launched last quarter, the sales of other projects have slowed down, and the overall price has declined slightly. The trading volume of the second-hand trading market is limited by the payment method and price, and the transfer volume is still low. If there is no urgent need to use funds, it is recommended not to sell first, can consider renting first, wait until the market conditions improve.
Figure 3: The price of apartments will decline slightly in Q3 2022
Source: CBRE CAMBODIA
The supply and location will determine the value of landed projects. According to statistics, there are more than 190 projects under construction. As of the Q3, there are more than 69,000 units of landed buildings in the whole city. I think the market has focused on the local market in the past three years because of the epidemic, including the Prince, Morgan and some apartment developers have invested in landed project construction around Phnom Penh, thus driving a wave of landed projects market. At present, the landed projects are gradually approaching saturation. We can see from the sales volume of the last year that most projects are not as fast as before.
Due to the scarcity of land supply in the urban area, we can see that the current landed projects are mostly located in the periphery of Phnom Penh. In addition, the traffic congestion in Phnom Penh will determine the project value by supporting the living functions around the future landed projects.
Figure 4: Location Map of Landed Projects
Source: CBRE CAMBODIA
As the market is nearly saturated, the developers’ construction projects are also conservative. At present, there are only five projects newly launched in the Q3. By 2022, the number of projects so far is half that of previous years, and the average unit price has also declined. From the data, it shows that the market for local projects will facing another challenge in the coming year.
Figure 5: The price of landed projects will decline slightly in Q3 2022
Source: CBRE CAMBODIA
From the data in Q3, it seems that the Cambodian market is facing a bottleneck. The local market is gradually saturated. Developers are facing greater competition and also need to spend more costs. I believe that the current market is a transitional stage of “long-short” transition. In addition to the above negative effects, many major infrastructure projects have been completed since Q4, such as highways, Phnom Penh International Airport, Siem Reap New International Airport Phnom Penh – Krong Bavet Expressway and so on. These major infrastructure projects will reduce the industrial production cost and increase the employment flow. In addition, next year’s East Asia Games will be an international benefit. Cambodia’s real estate is still worth looking forward to next year.
He has lived in Cambodia since 2014 and served as
Current position: Sales Manager of Master Real Estate Services, deeply engaged in the real estate market in Phnom Penh, Cambodia, comprehensively analyzed from the perspective of business, living habits, and cultural differences, and had a considerable understanding of Cambodia.
As the first Japanese property management company in Cambodia, C-Herald Property Service Co., Ltd. has developed rapidly in its five-year operation. At present, it has three service projects of hotel apartments in the business district of Phnom Penh, the capital of Cambodia.
C-Herald Property Service Co., Ltd. has received the entrustment management from many overseas landlords. Therefore, we decided to expand our business to individual assets management and reselling, and officially established a subsidiary company, Master Real Estate Service. Since then, C-Herald Property Services Co., Ltd. has completed the real 360° services provider. Master Real Estate can take over the follow-up services immediately for the landlords after the purchase which includes six major services: House Inspection, Renovation, Represent for unit handover, Leasing, Asset Management, and Reselling, making you truly realize your dream of becoming a “Sleeping Landlord”.
As a real estate service company that has worked deeply in the local area for many years, we have rich experience and professional human resources, can provide all kinds of real estate solutions and services, and provide multilingual services like Mandarin, English, Japanese, and Khmer to meet the needs of landlords and customers. We firmly believe that the core value of our company is to answer and solve customers’ problems.