Property | Property sales value in Phnom Penh down 30 percent, says real estate consultancy
The average primary property asking price for both condominiums and landed property in Phnom Penh have dropped by as much as 30 percent since 2019, said an international real estate consultancy at a recent investment seminar held in Phnom Penh.
Marc Townsend, chairman of CBRE Cambodia, presenting to a collection of investors and businesspeople during the firm’s ‘Fearless Forecast’ seminar last week, said the price drop had implications for a range of stakeholders including developers, banks and investors, in addition to the secondary sales market.
Memento Maxima Digital MarketingTownsend said that while the market was seeing considerable headwinds throughout 2023, 2024 will present a “dynamic landscape whereby property developers lacking good credit, standards, competence, and legality, will not survive the changing conditions.”
In reports in 2023, CBRE confirmed that the year represented the slowest growth in the new developments sector recorded in the market history, and the recently announced price drop for secondary properties comes in light of slowing construction nationwide.
In its first report for the new year, the firm has confirmed that an oversupply market-wide has reduced demand and has led to substantially lower average prices.
Due to this situation, Townsend advised developers to reevaluate their strategies, as he expects a continued downward trend in demand over the next 12 to 24 months.
Townsend suggested that in such a trough as the development market is now facing, “property developers with good occupancy records may choose to weather the storm by holding off on projects rather than launching new projects.”
As such, consumers in the real estate market will only demand units within developments that prioritize quality, transparency, legality, and competency, he said.
“For development companies boasting a clear background, genuine institutional and financial prowess, along with a commitment to fairness, the current market landscape will unfold as a realm of opportunities,” he said.
“As competitors falter and exit the stage, these credible developers find themselves not only surviving but thriving in new sectors and spaces.”
Despite the market low, Townsend did commend the resilience of the Cambodian economy, with a robust gross domestic product (GDP) growth of 5.8 percent in 2023 and a falling inflation rate of around 3 percent.
Townsend also emphasized Cambodia’s substantial infrastructure spending, past and ongoing, including multi-billion-dollar projects like ring roads, port expansions, and new international airports, which continue to bolster the country’s economic landscape and assure some longer-term value in property for those that can hold on to assets in the midterm.
Lawrence Lennon, managing director of CBRE Cambodia, also contributed to the analysis, adding that some developers and owners facing low occupancy might consider repositioning existing properties for alternative uses such as healthcare, student accommodation or low-cost hotels, to boost occupancy and revenue in the short to medium term.
However, he noted that developers will need to undertake some hurdles regarding regulation, design, budget, and competition analysis to make such changes successfully.
Lennon also highlighted that market initiatives are also underway to strengthen the investment market moving forward, such as the introduction of trust laws, various development and consumer-supporting tax exemptions and potential incentives for first-time buyers.
In a macro analysis of the broader real estate market, Lennon suggests further diversifying Cambodia’s economy, with more attention on agro-industry and value-added manufacturing, pushing traditional strengths of agriculture and manufacturing to higher profits and larger inclusion.
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