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Cambodia’s capital, Phnom Penh, is in turmoil as property developers from across Asia try to gain a foothold in the booming condo market dominated by beefy Chinese investors. Approved construction projects in Cambodia have risen nearly $3.1 billion in the second quarter of 2019, according to the Cambodian Construction Economic Development Corporation (CECDC), as beefy “Chinese investors” dominate the booming condominium markets in Phnom Penh.
According to the East Asia Forum, in 2017, 3,488 high-end residential units such as luxury apartments and condominiums were added to the Phnom Penh housing market. Another 15,688 luxury units were completed in 2018.
These success stories are giving developers, investors, and potential buyers more confidence, and condominiums are being built again across Phnom Penh. The construction boom in Cambodia is concentrated in two areas: the capital city and Sihanoukville, with the latter seeing a recent influx of Chinese investment. Most of the construction activity is taking place in Phnom Penh and Sihanoukville, where various real estate companies are operating in corridors and 12 districts in and around the capital, which has led to a significant increase in the number of housing units in these areas in recent years.
Chinese companies have pledged to invest an additional $7 billion in Cambodia, including a highway project that will connect the capital, Phnom Penh, with the country’s main port city, Sihanoukville in 2018. The agreement was announced with Chinese companies committing to invest in Cambodian infrastructure and infrastructure development (CIID) and the China Development Bank (CDB). This is the largest project announced for Phnom Penh since the end of last year, according to the CREA report. Chinese companies, and the deals were announced after pledging an additional $2.5 billion and $1.8 billion respectively for infrastructure and infrastructure investments.
Residential, commercial, and industrial real estate in Phnom Penh
Foreigners account for 60-70 pct of condominium sales in Cambodia, according to Reuters. In early 2019, the total number of condominiums in the city increased by 120% during the year and by more than 300% by 2020. The growth rate of residential real estate projects were similar to commercial property projects and commercial spaces getting more popular each day as the startups in Cambodia are also booming. Currently, average rent for high-grade office spaces at BKK1, BKK2 and Daun Penh are $13-25 per sqm per month. The demand to industrial real estate property also have been fed by the foreigner investment boom and the demand for industrial land as well as industrial shelters, warehouses has risen exponentially in Phnom Penh and Sihanoukville with the effect of Special Economic Zones (SEZ). China wants to transfer some part of its production to Cambodia and use Sihanoukville port as a hub just as Singapore.
Cambodian millennials are driving demand for affordable condos, and developers are now looking at parts of the condo market in Phnom Penh for future launches. The kingdom’s, especially Phnom Penh’s and Sihanoukville’s real estate markets could reach market time in terms of demand from emerging markets such as China, India and South Korea.
In 2016, Chinese companies were thought to be a bit late in developing their own real estate projects, but they are catching up, “says David L., head of Phnom Penh-based real estate consultancy. Chinese investment in non-stop construction in Cambodia is a healthy inflow of domestic and external investment, he says. This means that they are unlikely to be sensitive to Cambodian demand, which is good for the country’s economy and for Cambodia’s economy as a whole. He was wrong and Chinese people got a big share in the real estate market as they get into big projects.
Look at Cambodia’s sustainable, amazing growth rate. The growth rate has been under 6.5 only 4 years in last 15 years. According to World Bank, the growth rate in 2021 will be 6%. We expect a boom in the growth after borders are opened again. Putting aside the ciris in 2009, Cambodia’s growth rate has been continuously over 7, peaking to 13.25 in 2005. After 2009 totally sustainable rate at 7-7.5%.
Cambodia’s sustainable growth and the increase in foreign investment in recent years, lead to the fact that the condominium market in Phnom Penh has grown exponentially in recent years, with the average condominium sale price in Cambodia at $3,200 per square meter, more than double the $1,460 per square meter, according to a Cambodia real estate industry annual report. The prices of offices are slightly higher than the prices of residential property regarding similar quality.
Phnom Penh Real Estate Industry
Let’s consider how Phnom Penh real estate is affected by covid-19? How is the real estate sector, whether residential or commercial is related to the economical crisis and border restrictions? Cambodia’s property boom continues like a pandemic, and real estate in Phnom Penh has a high ROI as well as value rise up over time. Chinese, Japanese, Korean, and Western investment is showing the first concrete signs of its impact on the country’s economy. According to a new report by the International Monetary Fund (IMF) and the World Bank, the real estate market in Cambodia has changed massively in recent years.
Phnom Penh is the largest development area and we are seeing various real estate companies develop corridors in all twelve districts of the capital. The only place that could be suitable for your lifestyle is Phnom Penh, as it is one of the most popular destinations for expats and foreigners in Cambodia. We found out where many foreigners live and what they like about the city. If you need a real estate agency in Phnom Penh, simply contact us.
Although most of Cambodia’s real estate development is taking place in Phnom Penh, Cambodia’s capital, we are seeing a surge in growth. That said, there is a housing market that has been added to the housing market in and around Phnom Penh. It is booming as the nation becomes increasingly famous for its high quality of life, beautiful landscape and natural surroundings (source)
But scattered evidence suggests that property prices are falling in Phnom Penh, though they are clearly falling fast in Sihanoukville. We expect the same to happen in other parts of the country, particularly in the south – to the east and north – west of Cambodia.
Investors from all over the world will smell, feel, touch Cambodia and see drastic changes taking place. There is a clear path ahead, as restrictions have been put in place on foreigners buying property in Cambodia, and as predicted by renowned property experts.
Effects of Covid-19 on Real Estate industry
According to construction-property website, the COVID 19 crisis has not seriously affected the real estate market in Cambodia compared to neighboring countries. Nevertheless, some property prices (i.e., urgent resales due to bank loans) got down to 30 % and we have seen 40-50% occasional fire sales in the Kingdom of Cambodia. Cambodia is an emerging market and should also be considered for foreigners who want to diversify their assets in emerging markets. Owning a large portion of the country’s property in the form of residential and commercial real estate is something to consider, as it benefits both countries and allows foreigners and investors alike.
Cambodia’s real estate sector is one of the frontier markets available, meaning that new companies are entering the real estate market to benefit from this growth potential. The kingdom is more open to business, and the environment is leading to the development of a number of high-quality residential and commercial properties in the country. Over the past decade, not just condominiums and commercial high rises erected but also Borey buildings and villas have been dwelled in both Phnom Penh, Sihanoukville, and Siem Reap.