City poised for shopping mall boom
City poised for shopping mall boom
After spending $30 on clothes, Chan Pheavy sat down for lunch in the food court of Sorya Mall, plunking her shopping bags on the floor beside her.
The midday traffic at the mall near Central Market last Sunday was at its peak. Escalators glided customers up and down through the five floors of densely packed shops and a movie theatre. Adults and teenagers stared at displays, while others milled around outside.
“It is very comfortable to do shopping here,” Pheavy, 25, who works for a commercial bank in Phnom Penh, said as she ordered a soup for lunch. “I can find many products that are not available at traditional markets, and at the same time, I can check out changes in lifestyle.”
As Phnom Penh develops and consumer spending grows, the demand for full-service shopping centres is increasing, and investors are moving in to meet heightened expectations.
“Consumers want much higher standards for shopping malls,” said Hiroshi Suzuki, chief economist at the Business Research Institute for Cambodia.
Suzuki pointed to several projects in the making that would have a “good potential to lead the retail sector in Cambodia.”
The Japanese-funded, 68,000- square-metre Aeon mega-mall is expected to open on Sothearos Boulevard near the Sofitel in July 2014. Parkson, a Malaysian retail chain, has said in the past it plans to enter Cambodia. Naga 2, a multi-purpose building on National Assembly Street that will accommodate five-star hotels, a department store and gambling, is set for completion in 2015 and will attract customers from NagaWorld casino.
As early as next month, the Young Commercial Center and Resort, a $15 million shopping complex on National Road 6 near Chroy Changvar Bridge, is expected to open its doors.
In Phnom Penh, there are 68,000 square metres of shopping-centre space filled by six suppliers, including Sorya Mall, according to a July report from CBRE, a real estate research firm. By the end of 2014, however, the supply of shopping space is set to rise 142 per cent. In 2015, the report said, the space should go up by a further 21 per cent, and an additional 13 per cent at the end of 2016.
Compared with other Southeast Asian countries, there’s room to grow. The report found that the net internal area of high-quality shopping centres equates to 0.04 square metre per capita, compared with 0.07 in Ho Chi Minh, and 0.59 in Bangkok.
Owen Williams, manager of CBRE Cambodia, said mall mania is being driven by a combination of positive economic growth, an aspirational middle class and a young demographic with larger amounts of disposable income.
“Supply is set to grow at a rapid rate in the coming years, but we feel this supply will be met by demand due to improved quality of retail space, international management and the sector growth potential,” he said in the July report.
Cambodia’s youth, who make up a majority of the total population, are gradually moving away from traditional market shopping and finding their way into malls.
Since Sorya opened a decade ago, developers quickly followed suit, bringing to Phnom Penh shopping centres that include Sovanna Super market, Ratana Plaza, City Mall and Lucky Mall.
Chea Sokheak, general manager at Sorya, said that around 10,000 visitors arrive during working hours, but the number doubles on the weekends and holidays.
The mall is out of space to rent, Sokheak said, and though she’s watching the growing competition carefully, she still thinks there’s room for a diverse group of offerings.
“The newcomer could be a sign of more competition, but it is good because it pushes us to upgrade our service and quality,” she said. “Earlier, when people overcame hunger, they only preferred normal food to survive. But now, [with a growing living standard] they prefer healthy and tasty cooking.”
With bigger and glitzier options, there could be more recogniseable brands. Most malls in Cambodia still have largely individual, local retailers. Aeon mall said yesterday it was currently in discussion with representatives from global suppliers.
There could also be tough times ahead for the existing malls.
The CBRE study found that average ground floor rents in shopping centres have decreased 15.7 per cent year-on-year, from $39.5 per square metre to $33.2 per square metre. The decreases are a result of outdated shopping centres, the report said.
“With the new supply coming onto the market, expect stress and increased vacancy amongst those developments that are badly designed and poorly positioned,” the report said.
Over her lunch at Sorya, Pheavy said that she’s heard about the Japanese-funded AEON mall, and is “looking forward to see modern things in the centre”.
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