The Phnom Penh retail property market is showing signs of growth, although take-up has occurred outside of the purpose-built shopping centres, according to the latest report from international property group CBRE. The company says “the outlook for the retail sector is positive.”

Phnom Penh’s population continues to grow, and wages are increasing, making the capital an attractive destination for new investment. There are investors with the regional experience to provide retail units of international standards and occupied by large brands, CBRE says.

With the country’s Gross Domestic Product per capita now at $955, an increase of 9.3 per cent year on year, Cambodians have more disposable income, and that figure is expected to rise to $1,000 by 2013. This is expected to provide a major driver for an increase in demand for retail space. CBRE says that the Overseas Cambodian Investment Company (OCIC) has so far been the main investor in the retail sector, developing 62 per cent of the floor area of the shopping centres within the capital.

However the retail sector has a number of international investors entering the market in the next few years with large-scale projects, CBRE says, and future shopping centre supply is set to triple to 312,000 square metres in the next five years if planned developments go ahead on schedule, from the current level of 105,000 square metres.

Future developments planned for Phnom Penh include two large international operators entering the market from Japan and Malaysia.

However the first two projects to launch are from domestic developers. The shopping centre in the new Vattanac Capital building is due to complete towards the end of the year, offering three floors of luxury retail over approximately 11,500 square metres.

CBRE says that occupancy within shopping centres has grown, with current occupancy across the market standing at 78.8 per cent.

With prime retail space on the ground floors of these shopping centres being limited, demand for stand-alone retail outlets has grown.

Sihanouk Boulevard has become “a destination shopping location”, CBRE says, noting the number of large brands opening in stand-alone retail outlets, such as Mango, Axara and Sketchers. These retailers have reportedly experienced good growth in sales “although key facilities such as parking remain under provided.”

Rents within the sector vary widely, due to the range in quality of purpose-built retail outlets. Shopping centre rents vary from $10 per square metre to $80 per square metre per month.

Current stand-alone retail outlet occupiers will start to migrate into shopping centres due to improved quality of facilities and better anchor tenants within the future supply.

CBRE says that flagship stores will remain in the Sihanouk Boulevard area, “but expansion to purpose-built multi-tenant retail buildings will be required.” The company warns that “a two-tier market is likely to develop due to the difference in quality of the current and future supply being so vast.”