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Real estate market gearing towards middle-income group

Content image - Phnom Penh Post
New property developments being built in Phnom Penh dwarf the older and traditional-styled buildings. Heng Chivoan

Real estate market gearing towards middle-income group

While residential supply shows no sign of abating, many developers are changing course to cater to the middle and lower-income classes.

Chea Kokhong, deputy director of the department of micro-economic and taxation at the Ministry of Economic and Finance (MEF), said via phone yesterday that a study with seven prominent real estate companies shows that borey and condo sales have gone down 30 and 50 per cent respectively compared to the same period last year.

According to Kokhong, this trend is seemingly caused by the Kingdom’s torridly escalating political tensions and Kem Ley’s assassination, which have discursively affected the sector.

When asked if the study with a small number of developers is reliable, he said research conducted with Knight Frank, Bunna Realty, and many others has shown similar results. However, the ministry does not yet have a more wholesome collation of data to conduct more in-depth analysis.

Kokhong downplayed the situation, saying, “The demands may seem to have decreased because there are many providers. Before, there was only one provider, so they were able to sell 100 buildings, but now that there are four to five providers, each can only sell 30 to 40 buildings.”

He continued, “Right now, buyers are in the waiting period because many developers have delayed their projects and cut down their investment activities.”

Kokhong added that the risk of oversupply has decreased because there is an expected number of the middle-income that will continue supporting this sector in the medium-term future, though he did not disclose the amount of a middle-income actually is.

Vongsey Visoth, secretary at the MEF, said the government is currently drafting an affordable housing policy, which will make it possible for the middle-income class to afford to purchase these houses, thus stabilising the sector.

While real estate demand is currently on the slide, he said, this demand will increase in the next two or three years, leading to supply meeting demand at the midpoint, which will decrease the risks in the industry.

He said, “Real estate price will decrease along with credit from the banks and MFIs, so the risks of the industry getting into a stalemate will decrease as well.”

Huy Vanna, secretary of the Housing Development Association of Cambodia (HDAC) admitted that borey sales have gone down, but could not shed concrete details.

Nonetheless, Cheng Kheng, managing director of Huttons CPL, said borey and condo sales have not decreased so long as the development is of quality, and the developer is committed to finishing their project according to schedule.

He encouraged the media to be more positive about the sector because it has taken the people and the government more than 30 years to attract big investors to come to Cambodia.

“There are high buildings everywhere in Phnom Penh, but compared to the neighbouring countries, the number of buildings in Cambodia can’t be compared to even one street of those countries, so there should be no concern,” Kheng added.

Nevertheless, FURI Real Estate CEO, Ly Sen Leap, said condo sales have not decreased because his company is still selling and is doing even better now than it did last year.

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