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Future condo supply to impact the serviced apartment market

Content image - Phnom Penh Post
With a rooftop pool, residents of Maline provides a view of Phnom Penh. Photo Supplied

Future condo supply to impact the serviced apartment market

In the first half of 2015, the supply of serviced apartments saw an increase of 14 per cent when compared to the same period last year while rental prices remained stable.

According to a recent report from CBRE Cambodia, a total of additional 349 serviced apartment units will serve the market by the middle of 2016, with 5797 units present and 11 condo projects underway. The occupancy rate of serviced apartments declined from 90 per cent to 70 per cent at the end of 2014. However, in the second quarter of this year, it grew 80 per cent with the rising per cent of serviced apartment supply.

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A typical serviced apartment provides an array of amenities. Photo Supplied

Ann Thida, associate director of CBRE Cambodia told Post Property via email that despite the increasing demand, leasing prices for serviced apartments remained stable. She added that 90 to 95 per cent of tenants are foreign investors and foreign professionals from Europe and Asia.

A service apartment unit differs from a condominium with the services and amenities they offer, such as 24-hour staff and extra security. Entering the lobby of a serviced apartment unit is like entering hotel.

“The main difference between a condominium and a serviced apartment is that a serviced apartment is much more similar to a hotel,” said Central Mansion leasing manager Malen Chea. “For [Central Mansions], we cater to our [tenants] as an international hotel.”

Content image - Phnom Penh Post
With the feel of a hotel lobby, Malines’ serviced apartments bring the luxury of convenience. Photo Supplied

A swimming pool, bi-weekly cleaning services, a playroom or playground for kids and a gym are just some of the other amenities offered within a serviced apartment unit. Usually, a bar, café or restaurant are within the same building as the apartment units, as well.

On average, for a serviced apartment unit, a one bedroom unit or studio with 50 to 55 square metres varies from $1,000 to $1,500, two bedroom units with 70 square metres varies from $2,000 to $2,500 and three bedroom units with 110 square metres varies from $3000 to $3,500 per month, while “penthouse”units with 250 square metres are priced between $4,000 to $5,000 per month, according to the report, depending on the architecture and design.

Example for a package deal in serviced apartments:

∙ 24 hour power supply
∙ 24 hour security
∙ 24-hour front desk
∙ Cable TV
∙ Cleaning (2 times per week)
∙ Daily newspaper – available at the lobby
∙ Fitness equipment with modern and professional gym
∙ Fully equipped kitchen
∙ Hair dryer
∙ WIFI internet
∙ In house parking
∙ Iron/ironing board
∙ Keycard access to all areas
∙ Kid’s playground
∙ Laundry for bed linens (2 times per week)
∙ Rooftop endless pool
∙ Safe deposit box
∙ Sports and table tennis facilities
∙ Steam and sauna
∙ Water utility
∙ Washing machine

RATE EXCLUDED:
∙ Telephone IDD
∙ Electricity usage
∙ Mini bar
∙ Laundry
∙ Rooftop lounge & bar
∙ Spa and massage

However, the price of these serviced apartments pay for the rent, the services and the extra amenities which are included in the pricing packages. Tenants pay not only for a home but also for the many conveniences and security offered through the higher prices.

Van Chanthorn, managing director of Town City Real Estate Co. Ltd., said that among the new units rising in Phnom Penh, two serviced apartments opened in BKK1 and the other four apartments entered the market in Tuol Tompoung and Deum Thakav Market. “Both the serviced apartment supply and demand increased respectively compared to the same time last year, but it did not boost the rental prices.”

The areas comprising of serviced apartment units are in BKK1, Tonle Baasac, Tuol Tompoung, Deum Thakav market and Toul Svay Prey. Owners have added more anemities in their buildings such as swimming pools, gyms, steam rooms and sauanas, he said.

The managing director of Asia Real Estate Cambodia, Po Eavkong, said with the increase of the serviced apartment unit supply and demand, the market would face challenges with condos in the next two years because serviced apartment units are mostly for rent only while condos are bought and sold for investments. Consequently, the competition between condos and serviced apartments may increase. In order to remain competitive, serviced apartment owners in the city commenced a new strategy to provide customers with special packages in order to stay in the market.

“There will be an oversupply of condo units in the next two years, but there has to be a clear study in order to determine whether or not it will in fact over supply or not.”

Kek Narin, secretary of Cambodian Valuers and Estate Agency Association, said that the renting market will be very competitive, so if apartment owners do not improve their apartments, they may loose their clients since tenants often change their residencies.

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