After a suit and tie gala event at Sofitel this month that aimed to drum up local support for the newly launched luxury residence The Peak - the most expensive condominium project to date at a tune of $580 million, Rithy Sear, WorldBridge Chairman, announced that the project has been met with initial success.
“The reception of The Peak has been met with enthusiasm,” he said recently, adding that during phase one of the launch, which accounts for 507 units of the two tower residential development that will ultimately add 1,015 condominium units to Phnom Penh’s growing supply, has thus far sold over 30 per cent to local investors.
“We marketed the project to local investors so that they would have first choice for prime units,” he said at a press conference last week. “We expect the sales of the residential units to grow steadily.”
In terms of expected sales, Malay Nop, residential leasing and sales manager for CBRE Cambodia, said that “for The Peak, a major benefit is they have their own target and loyal customers, the majority of whom are Cambodian[s], as well as actively investing foreigners.”
The mixed-use development, that will overlook the Mekong River, is comprised of three 55-storey buildings. The third commercial tower will house 20-storeys of a branch of the renowned Hong Kong-based Shangri-La hotel. Below will be comprised of 35-storeys of Grade A office space.
While Grade A office supply has been slow to take hold, Sear explained that with the upcoming ASEAN Economic Community, he expects the office units to fare well as international corporations set up shop.
With another 5-storeys of prime retail space, Sear expects the fast developing location to provide all the amenities needed for the burgeoning urbanization of the capital.
Construction of The Peak is expected to commence in early 2016 and to be completed by 2020.
The developer, Oxley-WorldBridge Cambodia, a joint venture between Singaporean-based Oxley Holdings and WorldBridge Cambodia, was first established in 2013.
The Bridge, the joint venture’s first foray into the Kingdom’s frontier property market, has fared well amongst investors. According to Oxley’s most recent financial report, The Bridge has sold 96 per cent of the projects 762 apartment units and 71 per cent of 963 SoHo (small office, home office) units. It will be completed by 2018.
While the growing supply of condo units has been a concern, as Post Property previously reported with condo units decreasing in sales from 75 to 70 per cent in the first half of this year according to a survey by Hun Bunna Realty Group, Rithy was not phased that competition would hamper investment potential.
“There may be an oversupply in the coming years, but I do not see that having an impact on The Peak,” he said. “With more competition, investors will look towards successful, well-maintained projects in prime locations.”
While Nop acknowledged that competition for local and foreign investment into the property market has accelerated in the last two years, she was quick to note that it is important to keep in mind the “low base [of development] Cambodia is coming from.”
“Cambodia is the right country to invest in for many investors in terms of ownership structure and taxes,” she said, adding that this is something that places Cambodia above regional rivals.
Meanwhile, Stephen Higgins, managing partner of investment advisory firm Mekong Strategic Partners, said that having the five-star Shangri-La on board “is clearly a major boost to the project and will be a welcome addition to Phnom Penh.”
Nevertheless, he noted the size of the project means it could face difficulties “particularly with the number of apartments coming on stream and current vacancy rates,” he said.
While concerns of the secondary market have been voiced amongst property experts as the majority of projects are still under construction, Nop explained that while off-plan sales where early bird discounts are available have propped up the market, when more projects are completed “the resale market will be better as buyers can see and get a feel for individual units before they buy.”
This, she concluded, would be helped by professional property management that will upgrade the value of the property.
According to the Singaporean-listed Oxley Holdings financial statement for the fourth quarter of last year, the company saw earnings rise by 70 per cent with revenue more than doubling. Net profit stood at $11.6 million up from $6.8 million the previous year while revenue, tallied at the end of June, jumped by 134 per cent to $136 million. However, full year results saw revenue fall by 35 per cent to $492 million while net profit dipped by 79 per cent to $42 million.
The company intends to launch The Peak for sale in Singapore in the middle of next month.