Prices plateau in Phnom Penh’s condo sector
Prices plateau in Phnom Penh’s condo sector
In a mid-year research report published by realtor and consultancy CBRE Cambodia this week, the Phnom Penh condominium market, while facing some challenges as of mid-2024, remains a competitive location for regional investors, with ongoing supply growth alongside competitive pricing compared to regional comparisons.
The ‘CBRE Cambodia Mid-Year 2024 Report’, released on July 16, overviews trends in key sectors of the capital city’s estate market, including condominium, retail, office and landed properties, to offer poignant insights for potential investors and developers.
According to the firm’s latest findings, the Phnom Penh condominium market, an area of the market primarily dominated by foreign investors seeking strata-titled high-rise properties, witnessed over 2,400 new units come online in 2024’s first half, which represents a cooling of the sector compared to previous periods.
The report, however, projects 14,000 more new condominium units to be completed and online inside the residential housing market by the end of the year, boosting the overall supply to previously unseen heights.
The ongoing increase in supply is naturally putting pressure on asking sale prices, noted the report, with affordable and mid-range units demonstrating minor declines in asking prices.
However, high-end condo units have demonstrated more stable prices despite supply trends so far this year.
Increasingly, the report noted that moving forward property developers appear to be targeting affordable and mid-range units for new launches, in an attempt to attract local buyers as opposed to the sector’s traditional focus on high-end international investors, an area which has demonstrated a significant drop off in demand compared to previous years.
In light of changing demand, some developers are also introducing unit types such as loft-style units, maximizing usable space for budget-sensitive local buyers.
The report also confirmed the increase in engagement from branded residence operators among condominium projects in the capital, creating international standard offerings to encourage uptake and occupancy through short and long-stay rentals.
As of the first half of 2024, the Phnom Penh condominium sector also experienced a drop in new project launches, suggesting developers remain cautious of overstretching demand in the current economic climate.
The report confirmed approximately 2,200 units launched in the first half of 2024, a considerable decline compared to previous years.
The highest new launches on record took place in 2015 and 2019.
Most of the new launch projects including condominiums in 2024 cater to the high-end and mid-range segments, the report noted, with a minority targeting the affordable condos segment.
Compared to regional comparisons, as of 2024 Phnom Penh condominiums demonstrated a competitive average asking sale price of $2,500 per square meter, and an average yearly rental yield of 5.3 percent, according to CBRE’s surveys.
Neighboring Bangkok, Thailand, in comparison offered an average asking price of $10,000 per square meter, and an average annual rental yield of 4.5 percent; while Ho Chi Minh, Vietnam, offered an average asking price of $5,900 and a yield of 4 percent as of mid-2024.
Manila, Philippines, demonstrated an average asking price of $5,300 per square meter and an average annual rental yield of 4.4 percent.
In comparison to more developed Asian urban real estate markets, such as Hong Kong and Singapore, Phnom Penh condominiums also offer huge growth potential in the longer term given the city continues to expand rapidly, as well as commercial opportunities.
Hong Kong asking prices for condominiums averaged $33,000 per square meter this year and offer an annual yield of 3.1 percent; while Singapore demonstrated asking prices of $19,000 per square meter and yields of just 3 percent.
Spooling future demand in the real estate sector generally, the CBRE report also noted that between 2023 and 2033, Cambodia has over $36 billion worth of infrastructure development projects in the pipeline, a factor set to support growth in all types of real estate yields in the mid to long term.
