Why the Cambodian real estate market may see a boost in 2021

CBRE has recorded increased supply in Q1 for both office and residential sectors.

In a video conference held last April 6, CBRE Cambodia reported that Q1 saw an upstart in the continuation of delayed real estate development plans from 2020.

Managing Director James Hodge said that the Q1 results indicated a brighter outlook for the market as long-delayed plans restarted this 2021. However, the outbreak of new COVID-19 cases from 20 February in Cambodia caused another slowdown in the real estate sector.

“Our figures indicate a strong reduction in demand across almost all sectors. The good news is that deals struck before the outbreak continue to move forward,” he said.

“The dearth of interest since late February will mean a bleak outlook for at least the first half of the second quarter, especially whilst COVID-related travel restrictions continue to cap levels of business activity and keep domestic spending and tourism at a lower-than-normal levels,” he added.

Infrastructure development was reported to be continuing largely uninterrupted. This provided further support to land values and projects in their locales. Major infrastructure projects remain attractive to end buyers through their long-term benefits.

Senior Manager Kinkesa Kim reported that the condominium sector saw one relaunch and four completions. Supply for 2021 is expected to increase to over 10,800 units, as seven projects initially set for completion in 2020 were delayed until this year.

Average quoting sales prices increased by 4.8% for the high-end segment and 3.5% for the affordable segment. On the other hand, the mid-range segment recorded a negative adjustment of 0.4%.

The landed property sector saw 11 completions and a total of 21 launched projects between Q4 2020 and the end of Q1 2021. This sector is expected to have 9,500 units added this 2021, with approximately 4,500 introduced to the market by the end of Q1.

CBRE recorded that the average quoting sales projects on new projects fell between 13% and 19% across the different housing formats.

Within the office sector, Associate Director Ben Nesbitt said that the centrally owned segment saw the completion of two projects, fulfilling only 9% of the forecast 2021 total office supply pipeline and 65% of the forecast on supply of centrally owned office space for the year.

Completions included the Sathapana Tower, Phnom Penh’s third Grade A building located at Norodom Blvd.

Rental rates increased for Grade B and Grade C centrally owned offices. Grade B offices in the Central Business District (CBD) grew by 3.3% QoQ, whilst Grade B offices in secondary locations rose 3.9%.

Overall, occupancy in the office sector fell by 2.3%. CBRE Cambodia’s record of market activity levels indicates that Q1 2021 saw an increased number of deals being completed but the size of deals and lease terms fell sharply in comparison to last year over the same period.

Strata-office projects expected to be completed in 2021 is said to have an average monthly quoting rent of $26.80 per sqm, whilst quoting sales prices are presently recorded at $3,129 per sqm.

The retail sector saw four project completions totaling over 28,000 sqm of new supply. Occupancy rates were negatively impacted by 8.6%, whilst prime high-street quoting rents dropped 10%. Rents in community malls rose 4.2% whilst no recorded change was seen in retail podiums and shopping malls.