Global economic growth uncertainty has sapped considerable momentum from the Phnom Penh condominium market, which is well-known for its heavy dependency on foreign customers, with no developments in the capital completed or ready for move-ins in the third quarter (Q3) ended September 30.
In its “Phnom Penh Market Insights Q3” research report released last week, real estate firm CBRE Cambodia underlined that global headwinds continue to hamper the capital’s condo market, in terms of construction processes, transactions and rentals, leaving the condo supply at 36,000 units as of September 30, unchanged from three months earlier.
The company, the local affiliate of US commercial real estate services and investment firm CBRE Group Inc, categorises condo projects as “high-range”, “mid-range” and “affordable”.
CBRE Cambodia noted that the average per-sqm prices of condo units in July-September were $2,639 for “high-end”, $2,078 for “mid-range” and $1,408 for “affordable”, edging down by 1.2 per cent, 0.8 per cent and 0.2 per cent quarter-on-quarter, respectively.
On the third-quarter rental market, average monthly per-sqm rates were $11 for “high-end”, $9.50 for “mid-range” and $7.80 for “affordable”, dipping by 0.3 per cent, 0.9 per cent and 2.3 per cent quarter-on-quarter, respectively.
CBRE Cambodia associate director of research and consulting services Kim Kinkesa told The Post on October 12 that although Phnom Penh condo sales rates and rents in the third quarter reversed the slight recovery witnessed over the previous three-month period, the changes are small and do not substantially jeopardise the overall stabilisation in prices that has been seen since the beginning of 2022 and is expected to continue until the end of the year.
The anticipated return of foreigners to the Kingdom over the next year is also expected to trigger significant demand and occupancy growth.
To this end, Kinkesa commented: “In 2023, [we] expect transactions and rentals to improve against 2022, with just a few new projects set to be put on the market, while prices remain stable.”
CBRE Cambodia last month predicted that, given significant improvements in the economic and political environments in the Kingdom and abroad, the capital’s condo supply could top 45,000 units by end-2022 and 65,000 units by end-2023.
Global Real Estate Association president Sam Soknoeun remarked that the condo market continues to struggle with low demand and persistent price drops, albeit slight, even nearly a year on since the Kingdom moved to allow the full-scale resumption of socio-economic activity.
On the flip side, the discounted prices offer interested Cambodians the opportunity to invest in and potentially live in condos, he said. “Since the advent of Covid-19, which led to a drop in the number of foreigners in Cambodia, I’ve noticed that some condo developments have lowered their prices and opted to market to local customers.”
Soknoeun cautioned that the condo market could continue to face pressure in the period from October-March next year.
The Ministry of Land Management, Urban Planning and Construction reported that it approved 2,811 construction projects in January-August 2022 with total registered investment of $1.662 billion – down by 90 developments and 56.7 per cent in terms of value over the same time last year.
Of these, 2,521 or 89.7 per cent were residential projects, down from 2,530 in the same time last year.