Bulls prevail despite condo glut
Despite condo supply in Phnom Penh increasing at a fast rate as projects complete construction, many in the real estate industry are maintaining an upbeat outlook on future market conditions. However experts have cautioned that moving forward, new projects will need to be more prudent and mindful in their plans to build condos, especially when it comes to location.
Tuy Bun, shareholder of Residence L Cambodia which is developing condominiums in Phnom Penh for the middle class said while the broader condo market looked to be struggling from a sales perspective, his project had been steadily selling off units with 70 percent of units having been sold.
“My project is still moving forward little by little. I focus on people within the middle income bracket, and I sell them at a reasonable price range of between $1,000 and $1,100 per square metre,” he said.
When asked what he thought the future held for the condo market in Phnom Penh, he said his feelings were mixed, noting that he was informed that a project within the same price range as Residence L Cambodia had been recently halted in the middle of its construction process.
Real estate firm CBRE Cambodia estimates that condominium supply in Phnom Penh alone currently stands at 4,253 units and will reach 38,920 units by the end of 2019, representing a 9 fold increase.
Thida Ann, deputy director of CBRE Cambodia, commented that the luxury condo market had tapered off slightly, however developers targeting people within the middle income bracket were performing better.
Despite Ann’s comments, investors in high-class condos in Phnom Penh are shaking off any concerns about supply and sales woes.
A case in point is Sear Rithy, chairman of WorldBridge Group, who has invested millions in partnership with a Singaporean firm to develop two luxury residential projects. He told Post Property he does not see any threats to the condo market.
However, he said that developers needed to be wise when choosing the location of their project as the right location could make a big difference in sales numbers.
“Condos that are facing an uncertain future are those constructed in unsuitable locations, as well as projects lacking investment capital,” he said,
He continued, “My condo is strongly focused on its location, quality, and a strong investment capital foundation; and I’m not just selling a house, I’m selling a lifestyle.”
Meanwhile, Touch Samnang, deputy director ofthe Overseas Cambodia Investment Corporation (OCIC), noted that those still interested in buying condos in Phnom Penh comprised of mainly foreigners from China, Japan and Taiwan. Samnang also believed that any residential projects, not just condos, were a hard sell if the location was unfavourable.
Noun Rithy, Khmer Foundation Appraisal’s CEO, maintains a bullish outlook when it comes to Cambodia’s condo market, believing the market was “teeming with potential”.
He continued, “I don’t think that there’s anything to worry about, seeing as the country has achieved political stability and prosperous economic development.”
“Cambodia still has potential and as the number of investors to Cambodia continues to increase, they will want to live in condos when they arrive.”
Based on Rithy’s calculations, condo units that are currently on the market at the price of $300 to $400 per month usually attract Cambodian customers while units ranging from $550 to $1500 a month are mostly occupied by foreigners.