The first annual Real Estate Market & Outlook Conference 2016 (REMOC2016) will launch on Friday, April 1, at the Phnom Penh Hotel from 8:30am until 5:00pm, with a host of local and regional industry leaders giving their insight on the state of the Cambodian real estate market. Post Property caught up with the speakers of REMOC2016 to get their views on the climate of current and future property market prospects.
Sim Hoy Chhoung, CEO of VTrust Appraisal Co. Ltd:
Property valuation should be considered the heart of all real estate activities, and this must be developed in Cambodia. This means that brokers and salespeople serving their clients should have a good understanding of valuation; the concepts, practices and methodology. A seller’s unrealistic asking price is a roadblock that an agent should avoid to save time and effort. Because banks take property as collateral to secure loans, weaknesses in valuation processes in the booming years could lead to a banking crisis later on, as we see from lessons learned from the Central Bank of Ireland’s study in 2012.
In the coming year, expect to see a market correction in some subsectors and a switch of project development proposals toward the subsectors that exhibit continuously high demand. The only thing that we all should know is that the market space is becoming narrower; so before committing to doing a development project, there needs to be a detailed market and feasibility study.
Thida Ann, senior associate director at CBRE Cambodia:
2015 marked another extremely active year in the Cambodian property market with all sectors seeing significant activity. To run through a few key trends; CBRE tracked land price appreciation at approximately 8.4 per cent across central districts. New mid-rise office developments that came on stream through 2015 saw strong take up and grade B and C rents increased by 6.2 per cent and 2.3 per cent respectively. 7,014 condominium units were announced across 26 buildings in 2015 bringing total future supply, due for completion by 2018 to 21,414 units. Chamkarmon saw the greatest number of project launches announced with a 37 per cent share, with secondary locations such as Sen Sok and Chroy Changvar accounting for 15 per cent. Occupancy in serviced apartments held strong at a healthy 90 per cent with occupancy keeping pace with supply.
Chrek Soknim, CEO of Century 21 Mekong:
Condominiums aren’t a nascent market anymore in Phnom Penh. They have been here now for eight years, yet there are many things for developers, buyers and key players to learn so that they can tread the right path within this real estate subsector.
I believe condominiums are one of the solutions to curb heavy traffic, increasing land prices, convenience, and a quick pace of modernizing living standards among a young white-collar generation. However, following an excessive influx of condominium launches last year, the market has now become stiffly competitive while, at the same time, it also offers numerous choices for buyers.
When looking at the Kingdom’s market absorption rate at an average of 32.4 months, in recent months it’s started to slow down and this needs a careful analysis on local demand, affordability, and trends, instead of relying solely on foreign market comparisons when a new developer wants to enter the condo market.
James Padden, Commercial Agency Manager at CBRE Cambodia:
I think there is a need for caution regarding the residential market, and we have yet to see strong domestic owner/occupier demand that is required for condominiums to really drive the market forward. Existing investment is predominantly by overseas investors looking for capital growth. This market will be driven long-term by Cambodian occupiers and this has been slowly changing but is yet to become a clear segment of demand.
We have seen the announcement of strata title office space for the first time in 2014 and this is a welcome trend with this asset being a popular investment in other markets such as Hong Kong and Bangkok. High prices and limited availability of land in prime central areas are likely to continue the trend for development in secondary locations such as Sen Sok and Chroy Changvar. I think we will also see continued development and investment activity in provincial cities such as Sihanoukville, Battambang and Siem Reap. Overall we expect 2016 to be full of activity, driven by Cambodia’s continued strong economic growth and further bolstered by the movement towards ASEAN integration as there is continued intra-ASEAN investment and regional expansion of businesses out of their home markets.
Mr. Kim Heang, president of CVEA; and CEO of Khmer Real Estate:
The construction and real estate sector plays an important role as an economic driving engine by increasing its economic influences on the country’s economy. The industry provides construction jobs to about 10,000 workers throughout Cambodia, which spills over on several other economic sectors. We appreciate our industry leaders as well as key players for their effort in bringing construction and real estate sector to this point.
Nevertheless, without some changes, unity and strong cooperation among the players to further improve the industry (for instance, valuation subsector), we can hardly develop this sector to become a key leading industry for our country’s economy.
Therefore, we have to address opportunities and key challenges for all of us to solve and improve so that everyone in the industry benefits.
Kuy Vat, chairman of CVEA; and CEO of Century 21 Cambodia:
Bolstered by a gradual growth of our economy, we’ve seen that the real estate market grow bigger and bigger, to meet the rising demand for housing, office space, retail space as well as industrial amenities.
With lots of improvements in this industry so far, 2016 sees many opportunities despite the emergence of some challenges that might somewhat cool down the market, for example, the condominium market. So far we’ve heard that there’s some sentiment over the condominium market, for instance, resulting in stiff competition for developers to sell off their projects.
But to me, I’ve got a different point of view. First, this will create jobs for local agents who are asked to help developers sell off their units. Second, through numerous available suppliers, it offers an opportunity for foreign investors to come to our country and enjoy the newly available infrastructure and amenities currently, or soon to be, in place.
Hoem Seiha, Director of Research at VTrust Appraisal Co. Ltd:
Developers, policy makers and related key stakeholders need sound knowledge and in-depth insights into the real estate sector at a macro level so that they can work together to develop and curb, if any, challenges in the sector.
The construction and real estate sector has grown in importance for the overall economy by contributing to the creation of tens of thousands of jobs, pushing the demand for mortgages up by 19 per cent in 2014, and attracting billions of dollars in real estate-related FDIs that spillover into many other economic sectors.
My outlook for this sector is that even though the real estate market has grown so quickly that it might pose potential risks and growth volatility, I foresee that it will soon create a new economic engine alongside the country’s other key leading sectors such as garment, tourism and agriculture.
Sorn Seap, CEO of Key Real Estate:
Phnom Penh land prices continue to rise up by 10 to 20 per cent a year. Nevertheless, the whole of Phnom Penh has many areas that see different price growth rates depending on many factors, including zoning, planned infrastructure, and location special features.
Over the last 10 years, I’ve witnessed Phnom Penh’s quick expansion. Residents not only concentrate in central business zones but also spread out to form new clusters of housing in the outskirts – with some areas now home to tens of thousands of residents. Other locations will also have the same experiences in the next few years.
James Whitehead, director of content at www.realestate.com.kh