As Cambodia’s supposed property bubble threatens to burst, developers are amping up their game to stay afloat in an increasingly competitive market.
This holds true now more than ever, especially after the latest Knight Frank report, which suggests a 35.8 per cent quarter-on-quarter price decrease in the sector.
Nonetheless, Sharon Liew, CEO of real estate company Huttons CPL, said the price of a development does not necessarily reflect on its quality.
In addition to the land cost, the quality of the development in construction materials and interior furnishing will also contribute to development pricing.
“Landmark development with sustainable features will also add into the development cost,” she said. “Hence, a landmark development of more than 40 storeys with sustainable features selling at $2,000 per square metre will yield lower profit than a 10-storey building selling at $1,500 per square metre.”
Liew stressed that the most salient element that investors and buyers look for when purchasing a property is location.
While investors look at rental and capital gain, buyer-owners usually consider longer term investment, combined with a development concept that suits their lifestyle.
On the other hand, for developers, location and sustainability of a development are the key factors in distinguishing between successful and failed developments.
She said, “The public transportation in Phnom Penh is rather immature and the road traffic is growing by the day, hence developments with a work-live-play concept will see much potential until the transportation problem in the city is solved.”
One aspect that can be overlooked by developers is that of interiors and designs. Lorenzo Martini, associate at interior design company Arkimade/Martini, said, “With the exception of very few developers offering quality interiors, the interior decoration part of a unit is often treated as inconsequential. I would then say that, besides a few exceptions, interior decoration is mostly perceived as a necessary annoyance to be dealt with.”
Liew agreed: “Developers in Cambodia especially must understand the need for good designs and quality finishing.”
She continued, “At the end of the day it will be the design of the building and interior that will eventually make the buyer sign the dotted line. Some expenses just cannot be avoided. The need for marketing is also non-prevalent in Cambodia, but will increase as developers will find they face stiffer competition from better-marketed properties.”
As the market consolidates, it is evident that market forces will begin to identify and weed out the weaker developers.
“The stronger developers are here to stay rather than the weaker ones that adopt a hit and run strategy,” Liew added.