The supply of office space in Phnom Penh fell three per cent in the second quarter of this year on the first quarter due to removal of Grade C offices from the market, a report by real estate services firm CBRE Cambodia said.

The supply of Grade C offices decreased from 190,565sqm in the first quarter to 179,309sqm in the second quarter, the report said.

As of the second quarter of this year, total office space occupancy in Phnom Penh is 359,000sqm, it added.

CBRE Cambodia director Ann Sothida said 11,256sqm of Grade C offices had been removed from the market during the period.

“The Grade C offices have been removed from the market to be upgraded to Grade B as the trend of Grade C slows down,” she said.

‘Commercial building growth’

However, Advance Real Estate Co Ltd founder and CEO Po Eavkong noted that the construction of commercial buildings has grown considerably in recent years.

“Although there has been a slight decrease in the supply of rental office space, we have seen a lot of buildings constructed for rental purposes as a whole, especially big buildings.

“There are buildings for rent, condos for rent, we clearly see a lot of them in Koh Pich and Olympic Stadium,” he said.

Currently, Grade A offices cost between $25 and $40 per square metre, Grade B cost between $12 and $25, while Grade C are between $8 and $12, said Eavkong.

The average size of Grade B offices are 150sqm due to their affordable prices and high security, said Sothida, adding that “most of the foreign investors coming to rent office spaces are from firms such as banks, microfinance institutions and insurance companies. They are the biggest market.”

Cambodia Chamber of Commerce vice-president Lim Heng said most foreign investors to Cambodia come from Europe, the US, China, Thailand, Malaysia and Japan.

“Foreign companies invest in textiles, power plants, electric motor manufacturers and tourism,” Heng said.

According to the report, 52 office buildings were built in the capital during the second quarter of this year. Of these, two were Grade A office buildings, 15 were Grade B and 35 Grade C.