With the ASEAN Economic Community (AEC) set to commence at the end of this year, promising deeper cross-market potential for property investment, the region as a whole is experiencing a cooling effect—with the exception of Cambodia, which shows strong growth numbers according to property consultancy Knight Frank’s latest Asia Development Index.

The report states that during the first half of this year, the price for residential sites quantified across ASEAN slowed from 3 per cent growth to 1.1 per cent growth compared to the previous six months. Meanwhile, prime office space increased from 2.6 per cent to 3.6 per cent in the region.

The high-end housing markets in Singapore and Malaysia have been softened to curb speculation by measures such as the implementation of Malaysia’s Goods and Service Tax.

Indonesia, on the other hand, has been hampered in the residential sector by an economic slowdown which has damaged consumer confidence.

In addition, Bangkok’s market has shifted towards the luxury condominium sector that saw continued capital appreciation and higher profit margins, which resulted in slower, yet more sustainable growth.

Cambodia’s land prices, however, have surged by 14.1 per cent for residential, and 9.7 per cent for commercial land respectively, marking the biggest land price hike of all countries analysed.

Knight Frank’s Cambodian country manager Ross Wheble explained that the regional cooling “has benefited [Cambodia with] an influx of both foreign developers and investors seeking to take advantage of the comparatively low property prices and the relative ease at which foreign buyers can acquire freehold property (above ground floor level).”

Nevertheless, the report added that growth in Cambodia has decelerated in the second quarter of this year, suggesting prices may have reached their peak and will likely level off leading up to the AEC.

As to why prices are appearing to peak, Wheble explained the sales rates of newly launched condominium projects for the first half of 2015 compared to 2014 “have eased.”

“Which we believe is partly attributable to the increasing selling prices of newly launched developments suggesting that market prices in prime locations are reaching their peak.”

The report also noted that while office rental rates in Cambodia have remained flat, approvals for new developments have been the driving force for pushing commercial property upwards.

Wheble added that the rising value of commercial land was mirrored by planning policy while speculation over future growth potential of specific locations played a part in the formation of residential landprices.

However, he added “it is only once these future projects come on line that we will be able to accurately gauge the level of demand within the commercial sector.”

As the often touted AEC marches closer into taking effect and markets across the region have shown mixed results, Wheble said that those developments are more symptomatic of individual market conditions as opposed to the overall level of confidence leading up to the end of this year.