Potential oversupply likely to be mitigated by migration from villas
The country manager for CBRE, the world’s largest commercial real estate services firm, says next year will bring increased demand for industrial warehousing and manufacturing premises in Cambodia.
Young Englishman Daniel Parks, who has spent the last 2.5 years in Cambodia, forecasts an increase in transactions next year.
“2012 is going to see an increase in activity and an increase in volumes. I’m very positive about the property market and I think there are plenty of opportunities,” Parkes said.
“I would keep an eye out for retail and industrial warehousing for manufacturing which will probably be one of the most interesting sectors to watch.”
Parkes said the new Vattanac Capital Building, now under construction adjacent to the Canadia Bank Tower, will become Cambodia’s first “truly grade A office building.
The first phase of Vattanac Capital Building is scheduled for completion in the second quarter of 2012 and completion of the second phase before the end of the year.
Even with the new office space coming available in greater numbers of square metres than ever before, Parkes says migration from villas should sustain the marketplace.
“If you look at some of the offices it would suggest oversupply, however, most people are in villa accommodation and the time will come when those people will have the choice for a modern office building. The key items will be: what am I getting out of it and how much am I paying?”
“If you rent a villa you have to pay your own security, cleaners and maintenance.You might buy and upkeep your own electrical generator; if you have mechanical and electrical systems, they are your own responsibility. If you aggregate those costs and responsibilities, you’ll find that by moving into a modern office tower, you’ll get not only efficiencies in costs – you also don’t have to employ additional security and cleaning staff.”
Parkes said while the trend might not be clear at the beginning, it should become measurable.
“As the market matures, I think there will be a transfer from villa or grade C space, toward better office space, especially when you consider some of the buildings are coming toward the end of their useful lives. That will be a driver for modern office buildings. My goal for 2012 is to increase our exposure on the residential market so we can offer more choice and quality across a wider range on price points from small, cheap, apartments to special one-of-a-kind villas.”
In addition to the management of the new Phnom Penh Tower and the leasing of the coming Vattanac Capital building, CBRE also acts as leasing agent and manager of both Colonial Mansions and Mekong Gardens.
CBRE has been doing business in Cambodia since 1993 with a permanent office since 2007, 11 permanent staff and about 90 onsite staff, according to Parkes.
Other CBRE activities in Cambodia include providing consultancy and property services such as valuations of hotels and land in Siem Reap, land in Battambong and agricultural plantations in the provinces.
“In Phnom Penh we deal with land, hotels, retail offices and small scale residential,” Parkes said.
“Off the south coast we have been dealing with the two islands of Koh Rong and Song Saa. We act on behalf of the owners to market them internationally.”
Parkes says CBRE’s clients in Cambodia include Nokia, Mast, Tesco, Craig Wireless, CIMB, VinaCapital, Prudential and others.
“They have come to us and said: we would like to set up business in Cambodia and we sit down and understand them as a business or an individual and try and find out what it is they need, give advice about doing business in Cambodia and give specific real estate advice, introducing them to properties, guiding through negotiations, helping them come up with the best deal in the market.”
Parkes joined a group last week to chip in and donate 11 tons of rice for victims of the floods through King Norodom Sihamoni. The effort was coordinated by Pascal Brandt Gagnon with Christoph Bourdain, Luu Meng, Arnaud Darc among others.
“Pascal said would you like to donate and I said I would, given the opportunity and we went ahead and did it. The King was very nice, asked us to come along and say a personal thank you.”
The group also provided gifts to those disadvantaged by the flood including school materials, pens and paper and gave them to King Norodom Sihamoni for distribution through the Royal Palace.
“At CBRE we try to do what we can when we can.”
CBRE is located on the 9th floor of the brand new Phnom Penh Tower, which recently opened a Coffee Bean franchise on the ground floor and has Mekong Bank as a tenant in the lobby area.
Other tenants include Air France, the Swedish Embassy and Euro Cham. Parkes thinks the building will be very successful. “At the moment Phnom Penh Tower is the newest and best office in Phnom Penh. Occupancy is going to be increasing. Take-up is only as much as the economy is growing. In time the building will gain more occupancy,” he said.
Parkes likes the high quality construction of the building with high quality windows, elevators, plumbing and electrical systems.
“Phnom Penh Tower is a very easy place to come and set up your office, clean and efficient.”
CBRE’s role at Phnom Penh Tower is managing the property, liaising with tenants on fit out, managing the security as well as the mechanical and electrical systems and making sure everything functions, Parkes says.
CBRE is the largest real estate services company in the world with headquarters in Los Angeles, California, and more than 300 offices worldwide.
“We deal with all sectors of property, including office, retail, apartments, villas, shop houses. We also deal with hotels, tourism and leisure, whole islands, integrated resorts: a whole bunch of hotels put together. We also deal with agricultural projects, agricultural concessions and casinos.”
Parkes comes from Kent, England, where his father, a chartered surveyor, ran a real estate agency.
“My father started the business when I was six years old, so I spent my weekends with him helping to put up boards and holidays following him around, holding the other end of a measuring tape.
Subliminally, I have always had property running through my veins.”